1.2 - Business Ownership Flashcards
Limited liability
the condition by which shareholders are legally responsible for the debts of a company only to the extent of the nominal value of their shares.
Unlimited liability
a company whose shareholders will have to use their money or property to pay the company’s debts if it fails financially
Sole trader
you run your own business as an individual and are self-employed
Partnership
A partnership is an arrangement between two or more people to oversee business operations and share its profits and liabilities
Profit
Measures the difference between the values of a business’s revenue and it’s total costs
Compamy
Business that has it’s own legal identity
Shareholder
A person or organization that owes each part of a company. Each shareholder owns a ‘share’ of the business
Stock exchange
Market for buying and selling shares of public limited companies
Flotation
When a private ltd company becomes a public ltd company and has shares listed on stock exchange
Non for profit organization
Set ip to achieve objectives other then profit eg: charity
Advantages of being a sole trader
1) Quick and easy to set up
2) Make all the decisions for yourself
3) Keep all profit
Disadvantages of being sole trader
1) Can be stressful making decisions
2) If it goes wrong you have UNLIMITED LIABILITY
3) Alot of work
Advantages of partnership
1) Several people involved to contribute money
2) More people involved in discussing problems
Disadvantages of partnership
1) Partners may have different ideas ti solve problems
2) Decisions may take longer to make
Advantages of a company
1) Limited liability
2) Better status in eyes of some customers
