1. Forms of business ownership

Question 1

State one form of business ownership.

Answer 1

1. Sole proprietorship,

Question 2

State the feature of sole proprietorship i_n term of ownership_.

Answer 2

Sole proprietorship - Owned by one person.

Question 3

State the feature of sole proprietorship in term of access of funds_

Answer 3

Sole proprietorship

• It less likely for banks and other lenders to lend money to the SP due to a lack of personal assets that can serve as collaterals
• Access to funds is usually limited to the owners’ personal funds.

Question 4

State the feature of sole proprietorship_in term of risk (extend of liability)_

Answer 4

Sole proprietorship

• Sole owner is obliged to pay the business liabilities using his or her personal assets if business assets are insufficient to settle the debts (unlimited liabilities).

Question 5

Different between sole proprietorship and private limited company in term of level of control

Answer 5

Sole proprietorship

• Owner usually runs the business by himself or herself and has _absolute contro_l over the business.

Private limited company

• Shareholders have no control over the running of the business unless they are part of the management team.

Question 6

Different between sole proprietorship and private limited company in term of transferability of ownership

Answer 6

Sole proprietorship - It is easy to transfer ownership by notifying the corporate regulatory authority.

Private limited company - Shareholders simply sell away their shares

Question 7

State the feature of sole proprietorship in term of formalities and procedures_.

Answer 7

Sole proprietorship

• There is minimal administrative duties to adhere to.