1.5.4 Business forms Flashcards
What is a sole trader?
business with one owner
What do sole traders have to do?
pay income tax
licence to trade
planning permission
3 adv of sole traders?
profit isn’t shared
no disagreements
don’t have to share finance info
3 disadv of sole traders?
unlimited liability
stressful
hard to gain loans
What are partnerships?
businesses run by 2 or more people
What is a deed of partnership?
document stating the names of partners
how profit is shared
3 adv of partnerships?
easy to set up
specialise in certain area
gain high capital
3 disadv of partnerships?
unlimited liability
share profit
may disagree
What is a limlited partnership?
partners that provide capital but take no part in running the business (sleeping partner)
What is a limited company?
separate legal identity from owners
capital is raised by shares
limited liability
What is a private limited company?
limited liability company
3 adv of private limited company?
capital raised by shares
cannot lose control
owners pay less tax
3 disadv of private limited company?
have to publish financial info
profit shared
cannot raise lots of money
Define franchising?
business allows another firm right to use brand and products
What does the franchisee have to pay for?
start up costs
% of right to use name
one off fees
3 adv of franchisees?
less risk
gets full support
set up costs are predictable
3 disadv of franchisees?
profit is shared
lose independence
strict operating rules
3 adv to franchisors?
fast method of growth
cheap
motivated
3 disadv to franchisors?
potential profit shared
damage to reputation
cost of supporting is high
what is a social enterprise?
aim of improving human and environmental issues and well-fare
What is a co-operative?
owned and controlled by members who can purchase shares
What is a workers co-operative?
jointly owned by their employees
What is a mutual organisations?
owned by customers and offer financial services such as mortgages
What is a lifestyle business?
aims to make enough money to provide the flexibility needed and sustain certain lifestyle
What is stock market flotation?
occurs when firm goes public and sells their shares to the public for the first time
What is another name for stock market flotation?
initial public offering
What does the prospectus that firms publish before selling shares publicly have in it?
brief history
financial details
future strategies
3 adv of public limited company?
limited liability
dominate market
economies of scale
3 disadv of public limited company?
expensive
inflexible because of size
outsider can take control
What are non-monetary opportunity costs?
when impact is personal and effects peoples happiness
Define a trade off?
where a decision maker faces a compromise between two different alternatives
3 benefits of running own business?
independence
flexibility
job satisfaction
