a. Victor and Samba have been partners for two years. They have had disagreements throughout the period and Samba requested for a dissoultion of the partnership so that he could start a sole proprietorship.
State five problems Samba could face as a sole trader
b. Victor and Samba have been partners for two years. They have had disagreements throughout the period and Samba requested for a dissoultion of the partnership so that he could start a sole proprietorship.
State five benefits Samba could enjoy if he remained in the partnership
Explanation
a -Unlimited liability: the partners are liable to the debts of the business to no limit.
- Difficulty in management: decision-taking is going to be long and slow as every partner would want their voice to be heard, thus, creating disagreement.
- Inability to raise sufficient capital: partners cannot invite the public to raise capital, and because of its unlimited liability, members fear to invest in partnership.
- Risk of dissolution: the partnership stands dissolved at the death, bankruptcy ot insanity of a member.
- Action of one partner on others: there is the danger that one reckless partner can ruin others.
b - Large amount of capital is necessary for the business as a limited company.
- The success of the business requires the skill or knowledge of experienced members of the partnership/joint decision, for example, solicitors, doctors etc.
- The ownership and control should not be extended outside a family or friends.
- Partnership is suitable for executing short term value.
- Shared resources the partnership would provide access to shared resources, including capital, expertise, network, and assets.