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business studies (a-level) > 1.5: business forms > Flashcards

1.5: business forms Flashcards

1
Q

what is unlimited liability?

A

the ability to lose more money than was originally invested

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2
Q

what happens if an unlimited liability business has business debts?

A

they would be forced to sell personal assets to pay off business debts

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3
Q

what liability does a sole trader have?

A

unlimited liability

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4
Q

what is a sole trader?

A

a business organisation with a single owner

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5
Q

can sole traders employ people?

A

yes

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6
Q

what tax do sole traders pay?

A

income tax and national insurance

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7
Q

what are some advantages of being a sole trader? (3)

A
  • keeping all the profit
  • easy to set up
  • flexible: owner is in charge of everything
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8
Q

what are some disadvantages of a sole trader? (3)

A
  • the owner has unlimited liability
  • its difficult to raise finance
  • the business will close upon death of the owner
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9
Q

do sole traders qualify for government help?

A

yes

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10
Q

what is a partnership?

A

a business organisation owned by 2-20 people

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11
Q

what is each member of a partnership entitled to?

A

their share of the business profits

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12
Q

what is a deed of partnership?

A

covers and explains the rights of each owner (profit, control, responsibility)

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13
Q

why is it smart to set up a deed of partnership?

A

it outlines what each member is entitled to

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14
Q

what is a sleeping partner?

A

someone that invests, and takes a cut of the business profits. but they make none of the decisions

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15
Q

what type of liability is a partnership for the partners?

A

unlimited liability

do not forget: sleeping partners only have limited liability

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16
Q

what are the advantages of partnerships? (3)

A
  • easy to set up
  • different partners can specialise in different areas
  • partners share the burdem of running
17
Q

what are the disadvantages of partnerships? (3)

A
  • partners have unlimited liability
  • partners have to share the profit
  • partners may disagree and fall out
18
Q

what is the acronym for private limited company?

A

Ltd.

19
Q

what determines ownership of a private ltd company?

A

broken down into a specified number of shares

20
Q

who can buy shares in a private ltd company?

A

sold by the owner, to only who they allow (eg. friends, family, venture capitalists)

21
Q

who makes decisions in a private ltd. company?

A

the person appointed to run the company (CEO)

22
Q

what liability is in a private ltd. company?

A

limited liability

23
Q

list some advantages of private ltd. companies (2)

A
  • access to greater finance and capital
  • professional image and reputation
24
Q

disadvantages of private ltd. companies (2)

A
  • more expensive and time consuming to setup
  • more complex legal requirements and regulations
25
Q

what do you need to report annually as a private ltd. company?

A

your financial reports and audits

26
Q

why would you become a public limited company?

A

to gain a significant amount of capital

27
Q

what is the acronym for public limited company?

A

Plc.

28
Q

what is the problem with transitioning into a plc?

A

it is a very complex process with many legal requirements

29
Q

what is a stock market flotation?

A

the initial sale of shares, called an initial public offering

30
Q

what are the risks of a public limited company?

A
  • ownership is spread among a large group
  • reduces financial risk
31
Q

what is the liability of a plc?

A

limited liability

32
Q

who can buy shares in a plc?

A

anyone over 18

33
Q

what causes a company’s share value to increase?

A

sales on the stock market (they are very liquid)

34
Q

how is decision making handled in a plc?

A

a board of directors, make the decision-making process longer

35
Q

what is the aim of a lifestyle business?

A

to maintain a certain lifestyle

36
Q

advantages of a lifestyle business (2)

A
  • less stress
  • choose your own hours
37
Q
A

business studies (a-level) (1 decks)

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