1.5.4 Forms of business Flashcards
What are the forms of business
- Sole trader
- Partnerships
- Private limited companies
- Public limited companies
- Social enterprise
- Franchise
- Lifestyle business
- Online business
Sole trader
one person business with unlimited liability
- individual who owns and operates his or her own business (set up by entrepreneur)
- may be employees
- only one to benefit financially
4 ADVS of sole trader
1-no administrative costs / formal rules
2-income = Keep all profits
3-complete confidentiality
4-less bureaucracy (less legal paperwork)
4 DIS of sole trader
1-unlimited liability
2-limited access to finance for growth
3-long hours of work
4-difficulty to run during ill health(Cant do any work)
Partnerships
type of business organisation comprising between 2-20 people
pool money/skills/resources/share profit/loss based on partnership agreement/deed of partnership (GENERAL)
-without forming a company
UNLIMITED
4 ADVS of partnerships
1-flexible & easy to set up
2-flow of personal income
3-each partner contributes resources and skills
4-shared workload
4 DIS of partnership
1-little protection/unlimited liability
2-lack of structure
3-easy to fail
4-potential conflict due to clash of interest
Private limited company
Business that sells shares to friends and family
3 ADVS of private limited company
1-limited liability
2-shares to family/friends = trusted circle
3-no risk of hostile takeover
2 DIS of private limited company
1-harder to find funding
2-pay corporation tax
Public limited company
Company with limited liability whose securities are traded on stock market bought/sold by anyone
4 ADVS of Public limited company
1-capital = selling shares
2-large production scale
3-legal status - benefit publicity
4-limited liability
4 DIS of public limited company
- lose control
- disagree conflict
- publish detailed accounts
Social enterprise
A business that is changing the world for the better
ADVS of a Social Enterprise
- Better customer relationships
2. Enhanced brand image and reputation
