1.5.4 Business forms Flashcards
define business forms
legal structure it takes
define limited liability
owner and business are seen as separate legal entities
define unlimited liability
owner and business seen as same legal entity
define sole trader
owned by one owner
small businesses
pro’s sole trader
- easy to set up
- make own decisions
- all profits kept
con’s sole trader
- unlimited liability
- difficult to raise money
- no eos
define partnerships
2 to 20 partnerships share risks, costs and responsibilities
pro’s partnership
- profits go to partners
- range of skills
- shared problems and decisions
con’s partnership
- unlimited liability
- disagreements
define private limited company (Ltd)
can expand and grow by selling more shares, shares cannot be bought by public
pro’s private limited company
- limited liability
- raise extra capital by selling more
shares to friends and family - can employ managers
con’s private limited company
- accounts public
- cannot sell shares on stock exchange
- red tape
define public limited company (PLc)
once ltd had grown considers becoming a Plc, stocks can be bought by anyone
pro’s public limited company
- raise large share capital
- limited liability
- higher brand awareness
con’s public limited company
- risk of takeovers
- loss of ownership
- publish records
define franchise
small business owners buy rights to sell the goods of a large company
define franchisee
small business owners buying the rights
define franchiser
large company selling rights
there is
initial set up fee
% of sales turnout is paid annually
franchisee pro’s
less risky
loyal customers
marketing costs given
franchiser pro’s
royalty payments
expansion
less risk
franchisee con’s
costly start up
limited creativity
royalty fee’s
franchiser con’s
can impact brand reputation
define social enterprise
business that trades for a social and environmental purpose
define lifestyle business
grow big enough to provide a return of investment for investors
online business factors
easy to set up
available 24/7
