1.2 - business ownership Flashcards
sole trader
someone who sets up a business on their own
deed of partnership
an agreement between partners that sets out the rules of a partnership
stock exchange
a market for buying or selling shares of public limited companies
profit
total cost minus expense
stakeholder
individuals and organisations that affect and are affected by actions of a business
flotation
when a private limited company becomes a public limited company
unlimited liability
a person that owns a business can have their personal possessions at risk
limited liability
can loose the cost of shares but no other company debts
company
a business that has its own legal identity
partnership
when 2 or more people join together in a business
shareholder
a person or organisation that owns part of a company
sole trader advantages - 5
- your own boss
- can decide things quickly
- easy to set up
- keep all the profits
- make your own decisions
sole trader disadvantages - 5
- unlimited liability
- lack finance
- not have all the skills required
- heavy workload
- difficult to take holiday
partnership advantages - 3
- share workload
- more finance
- share skills
partnership disadvantages - 3
- may disagree with other partners
- unlimited liability
- liable for actions of another partner
company advantages - 4
- limited liability
- better status in eyes of costumers
- continues after death of founder
- can bring investors
company disadvantages - 4
- have to register
- disclose information on sales and profits
- have accounts independently checked
- if there is other investors the original founder isn’t in control
private limited company[LTD]
- usually has shareholders who have started the business , such as family members
- original owner in control
- shares cannot be advertised to the public
- outside investors can be offered shares in exchange for money invested
LTD (private) advantages - 3
- limited liability
- customers have more confidence in status
- managers can be employed and shareholders profit
LTD disadvantages - 3
- extra legal procedures that cost money
- some financial information must be published
- investors may become shareholders , reducing original owners control
public limited company [PLC]
- can sell shares to general public on stoke exchange
PLC advantages - 3
- have more money from advertising shares
- higher public profile on media
- shares can be tempting to investors
PLC disadvantages - 3
- no control over who buys shares~ business could be taken over
- lots of legal formalities can be expensive
- owners may not have same objectives as new shareholders
