1.2 Types of Business Entities Flashcards
What is public sector?
Public sector refers to parts of the economy run by the government such as transport and education
What is private sector?
Private sector refers to parts of the economy that are not run by the government. Private sector companies are usually for-profit
What are the 4 types of profit-based organisations?
-Sole trader
-Partnership
-Privately held companies
-Publicly held companies
What is a sole trader?
A sole trader is an individual who runs their business alone
State 2 features of a sole trader
-Full control of business
-Usually limited finance
What are ADV & DIS of sole traders?
ADV:
-Complete control over the business
-Flexible working hours
DIS:
-Lack of continuity
-Limited capital
What are partnerships?
Partnerships are businesses that are owned by 2 or more people who make joint decisions
State 2 features of a partnership
-Partners make joint decisions
-Partners have unlimited liability
What are ADV & DIS of partnerships?
ADV:
-Various skills & knowledge
-More capital
DIS:
-Profits have to be shared
-All partners have unlimited liability
What are companies?
Companies are businesses that are incorporated meaning that they have their own legal identity. Companies can have an unlimited number of shareholders
State 2 features of a company
-Shareholders own but not necessarily run the business
-Generally, greater finance is available
What are ADV & DIS of companies?
ADV:
-Increased stability, if shareholders die business can continue
DIS:
-Time & money consuming to fulfil legal requirements
State 2 features of a privately held company
-Privately held companies can only sell shares privately
-They do not have to show financial records to the public
State 3 features of a publicly held company
-Publicly held have to publish shares on a public place such as on the stock exchange or online
-They have to show financial records to the public
-They do not have control over who buys their shares
What does social enterprise mean?
Social enterprise refers to a business that has a social purpose
State 2 features of a social enterprise
-Social enterprises have a clear public mission
-Social enterprises are mostly not for profit, if yes it is to support theior public mission
What does social purpose mean?
Social purpose means that a business aims to improve human, social or environmental well-being
What is a for-profit social enteriprise?
A for-profit social enterprise is a business that has the aim to make profits but its priority is to fulfill their social purpose
What are the 3 types of for-profit social enterprises?
-Private sector companies
-Public sector companies
-Cooperatives
What is a cooperative?
A cooperative is a business that is owned and operated by its many members who share profits
State 2 features of a cooperative
-It is a type of corporation
-Membership is usually open and voluntary
What are ADV & DIS of for-profit social enterprises?
ADV:
-Workers are motivated
-Stakeholder community benefits from it
DIS:
-Decision making is time consuming
-Capital may be insufficient for growth
What are non-profit social enterprises?
Non-profit social enterprises are businesses that do not aim to make profits and their only goal is to fulfill their social purpose
What are the types of non-profit social enterprises?
-Non governmental organisations (NGOs)
-Charities
What are NGOs?
NGO’s are businesses that have a social purpose that is socially desirable such as Greenspace
What are charities?
-Charities are a specific form of NGOs that have an aim to help those in need
-Charities do not have to pay taxes
What are ADV & DIS of non-profit social enterprises?
ADV:
-Help people
-Motivate others to help
DIS:
-They are reliant on funding
-Passion can lead to loss of support
