1.3 Business Ownership

Question 1

Advantages of being a Sole Trader?

Answer 1

Easy to set up.
Little finance required.
Full control.
Keep all the profits.
Financial information is private.

Question 2

Disadvantages of being a Sole Trader?

Answer 2

Unlimited liability.
Business stops if ill or on holiday.
Long working hours.
Shortage of capital.
Skills shortage.

Question 3

Advantages of being in a Partnership?

Answer 3

More capital available.
Easy to set up.
More skills available.
Shared workload.
Financial information is private.

Question 4

Disadvantages of being in a Partnership?

Answer 4

Shared profit.
Unlimited liability.
Shortage of capital.
Slower decision making.
No continuity.

Question 5

Advantages of having a Private Limited Company (LTD)?

Answer 5

Limited liability.
Continuity.
Can raise capital easier.
Control over share sale.

Question 6

Disadvantages of having a Private Limited Company (LTD)?

Answer 6

Financial information available to the public.
Complex and expensive to set up.
Sale of shares is restricted.
Dividends to be paid.

Question 7

Advantages of having a Public Limited Company (PLC)?

Answer 7

Can raise large amounts of capital.
Easier to borrow money.
Limited liability for shareholders.

Question 8

Disadvantages of having a Public Limited Company (PLC)?

Answer 8

Possibility of a takeover.
Complex and expensive to set up.
Hard to manage as so large.
Financial information avaliable to the public.

Question 9

What is a Sole Trader?

Answer 9

Business owned by one owner, also known as a sole proprietor.

Question 10

What is a Partnership?

Answer 10

Partners are all joint owners of the business, can make decisions themselves or can employ a manager.
2 - 20 people.

Question 11

What is a Private Limited Company (LTD)?

Answer 11

Family and friends can buy shares in the business, cannot be bought by the public. Owners control who buys the shares.
Minimum 2 people - no maximum

Question 12

What is a Public Limited Company (PLC)?

Answer 12

Shares can be bought and sold by anyone on the stock exchange. Normally start as a LTD but then becomes a PLC.
Normally a very large business.

Question 13

What is Limited Liability?

Answer 13

Limited Liability protects a business owners personal funds from being used to pay business debts.

Question 14

What is Unlimited Liability?

Answer 14

Responsibility for the debts of the business rests with the owners.

Question 15

What does Capital mean?

Answer 15

Money raised to start or develop a business.

Question 16

What does Dividend mean?

Answer 16

Money paid to shareholders from business profits.