1.2 Business Ownership Flashcards
What type of liability does a sole trader have?
Owner: Unlimited Liability
What type of liability do partnerships have?
Partners: Unlimited Liability
What type of liability does a Private Limited (Ltd.) company have?
Shareholders: Limited Liability
What type of liability does a Public Limited (PLC.) company have?
Shareholders: Limited Liability
What type of liability does a Not for Profit organisation have?
Limited Liability
Advantages of a sole trader
Own Boss - Keep control
Decide what happens to profits
Can employ people
Cheapest to set up
Advantages of a Partnership
• Shared responsibility
• More investment
• Not working = business still
earning
• Can have “sleeping partners”
(Limited Liability but no say in
how the business is run)
Adavntages of a Private Limited (Ltd.)
• Can keep control by keeping
a majority of the shares
• Opportunity for additional
investment
Adavntages of public limited (PLC.)
• Can sell shares on the Stock
Market - more investment
• Kudos / greater reputation
Adavantages of Not for Profit
• Opportunity to increase
income/impact by publicising
‘Charity’ status
Disadvantages of sole trader
• all liability / need insurance
• Not working = not earning
Disadvantages of Partnership
• Have to share profits
• Not in complete control
• More expensive to set up
Disadvantages of Private Limited (Ltd.)
• Cannot sell on the stock market
• Selling more than 49% of the
shares could see you lose control
• Profit likely to be shared
through dividends
Disadvantages of Public Limited (PLC.)
• Kudos / greater reputation
• Share Price controlled by the
market - investment might
increase or decrease depending
on the economy
• Risk of a Hostile Takeover-
could be voted out as CEO by the
shareholders at an AGM
Disadvantages of not for profit
• Close scrutiny by the Charity
Commission
