Identify1 markBoth boards
A bakery in Molepolole is set up and owned by one person, who is personally responsible for its debts. Which type of business organisation is this?
Show the mark scheme and the examiner note
Answer: Sole trader
- One owner
- Personally responsible for debts = unlimited liability
- A. Sole trader — Correct: one owner, unlimited liability, and no legal separation from the owner.
- B. Private limited company — A company is a separate legal entity: the owner would not be personally liable, and shares would exist.
- C. Partnership — This describes at least two owners sharing responsibility.
- D. Public limited company — Shares would be traded publicly, which is neither stated nor plausible at this size.
Examiner technique: The giveaway is liability, not size. Many small businesses are companies precisely to separate the owner from the debts.