1.4 - Different forms of businesses Flashcards
What are the different forms of businesses?
Private and Public sector organisations Sole Traders Private Limited Companies Public Limited Companies Non profit organisations
Describe how a Public sector organisation works
They are owned and run by the government
Main objectives will be to provide a service for the general public
Describe how a Private sector organisation works
They are owned and run by private individuals
Main objectives is to maximise sales and profit
What are the different forms of businesses in the Private Sector (owned by private individuals)?
Sole Trader
Private Limited Companies
Public Limited Companies
Which type of business is unregistered?
Sole Traders
Which types of businesses are registered?
Private Limited Company (name + Ltd)
Public Limited Company (name + PLC)
What is a Sole Trader?
An unregistered business owned by one person
What can a Sole Trader do?
Owner may employ staff
Can keep all of the profit
Business is unregistered
What is Unlimited Liability?
The owner of a business is liable for all the business debts
Advantages of Sole Trader?
Be your own boss
Income is yours
Very skilled in business
Multiple more incomes
Disadvantages of Sole Trader?
Unlimited Liability Responsible to generate the business Responsible for all the Admin Difficult to expand Limited access to capit
What are Limited Companies?
A business can be registered with companies house
Describe how Limited Companies work
Business becomes a company and owners become shareholders
Business has a separate legal identity from the owners
Have limited liability
Business accounts must be checked annually by an independent accountant and sent to company house
The profit made by a business belongs to the owners called shareholders
The shareholders share of the profit is called a dividend
What are Shareholders?
Owners of the company
What are Directors?
People who run the business on a day to day basis
