1.3 Business Ownership Flashcards
4 types of business ownership
Sole trader
Partnership
Private limited company (Ltd)
Public limited company (Plc)
Who owns sole trade business?
One person has sole responsibility
Who owns partnership business?
2-20 partners who each bring a skill
Who owns a Ltd and Plc
Shareholders
Where do soletraders get investment from?
They raise all capital and raise all start up cost
Where do partnerships get money from?
-Comes from the partners
- You have to buy in to be a partner
Where do Ltds get start up money from?
Owners or shareholders
Where to Plcs get start up money from?
-Investment from shareholders
- Banks are likely to invest because Plcs have a small risk
What businesses have shareholders?
Plcs and Ltds
Difference between shareholders in Ltds and Plcs(2p)
- In Ltds, you can only sell shares to family and friends
- In Plc l, you can sell shares to anyone
What businesses have unlimited liability?
Sole trader and partnership
What is unlimited liability?(2p)
- Means you can lose everything
- The business has no separate legal identity; the business and the owners personal possessions are linked
What businesses have a limited liability?
Plcs and Ltds
What is limited liability?
Your personal possessions have a separate legal identity; you can only lose what you put in
What is limited liability?
Your personal possessions have a separate legal identity; you can only lose what you put in
What legal things do sole traders have to do to set up?
Let the Inland revenue know so you can pay business tax
What legal things do partnerships have to do to set up?(2p)
- Draw up a DEED OF PARTNERSHIP
- Let the Inland revenue know so you can pay business tax
What is a deed of partnership?
A document that details job roles, who invested what and what each partner is entitled to
What legal things do a Ltd have to do to set up?(3p)
- The business name has to have Ltd in it
- You have registered your company’s house and they will give you a CERTIFICATE OF CORPORATION
- Let the Inland revenue know so you can pay business tax
What do Plcs have to do to set up?(4p)
- Register with company’s house so you can get a CERTIFICATE OF CORPORATION
- Let the Inland revenue know so you can pay business tax
-Plc has to be in the name - Company reports must be made public
- Have to hold an annual meeting and invite all shareholders
Who gets profit in sole trader?
The sole trader
Who gets profit in partnership?
Partners
Who gets profit in Ltds and Plcs?
DIVIDEND is paid to shareholders
What is a dividend?
- A sum of money paid regularly (typically annually) by a company to its shareholders out of its profits
