1.2 - Types of business entities Flashcards
Cooperatives
Cooperatives are for-profit social enterprises set up, owned and run by their members, who might be employees and/or customers.
Company
A company (or corporation) refers to a limited liability business that is owned by shareholders
IPO
Initial public offering (IPO) occurs when a business sells all or part of its business to shareholders on a public stock exchange for the first time. This changes the legal status of the business to a publicly held company.
Deed of partnership
The legal contract signed by the owners of a partnership. The former deeds specify the name and responsibilities of each partner and their proportion of any profits or losses
Incorporation
There is a legal difference between the owners of a company and the business itself. This ensures that the owners are protected by limited liability.
Limited liability
Limited liability is a restriction on the amount of money that owners of a company can lose if the business goes bankrupt, i.e. shareholders cannot lose more than the amount they invested in the company.
Unlimited liability
Unlimited liability is a feature of sole traders and partnerships who are legally liable or responsible for all monies owed to their creditors, even if this means that they have to sell their personal possessions to pay for their debts.
Social enterprise
Social enterprises are revenue-generating businesses with
social objectives at the core of their operations. They can be for-
profit or non-profit business entities, but all profits or surpluses
must be reinvested for that social purpose rather than being
distributed to shareholders and owners.
NGO
Non-governmental organizations (NGOs) are private sector
not-for-profit social enterprises that operate for the benefit of
others rather than primarily aiming to earn a profit.
Partnerships
A type of private sector business entity owned by 2-20 people (known as partners). They share the responsibilities and burdens of running and owning the business.
Private sector
The private sector is the part of the economy run by private
individuals and businesses, rather than by the government,
such as sole traders, partnerships, privately held companies and
publicly held companies.
A privately held company
A business owned by shareholders with limited liability but whose shares cannot be bought by or sold to the general public on a stock exchange
A publicly held company
An incorporated limited liability business that allows shareholders to buy and sell shares in the company via a public stock exchange
The public sector
The public sector is the part of the economy controlled by the
government. Examples include state healthcare and education
services, the emergency services, social housing and national
defense force.
Sole trader
A self-employed person who runs the business on his/her own. This means s/he has exclusive responsibility for its success (profits) or failure (unlimited liability losses)
