1.5.4 forms of business Flashcards
different types of business structures
sole trader
partnership
private limited company (LTD)
public limited company (PLC)
sole trader (def.)
a business that has a single owner (although may hire employees)
sole trader adv.
easy and inexpensive to start up
owner has complete control over the business
all profits belong to owner
sole trader dis.
unlimited liability (meaning owner is responsible for any debts)
limited access to finance and capital
limited skill sets
partnership (def.)
two or more people join together to form a business
partnership adv.
easy to set up and inexpensive
shared responsibilities and decision-making
more skills/knowledge available
increased access to finance and capital
partnership dis.
unlimited liability
potential for disputes between partners
profits are typically shared equally - regardless of the contribution
difficult to transfer ownership
private limited company (def.)
company owned by a few investors as shareholders
private limited company adv.
limited liability (meaning owners are not responsible for the company’s debts)
access to greater finance and capital
easier to transfer ownership
can have a professional image and reputation
private limited company dis.
more expensive and time-consuming to set up
more complex legal requirements/regulations than sole traders
shareholders have little control over the company as the founder usually imposes their agenda
public limited company (def.)
shares are publicly traded in a stock exchange
public limited company adv.
access to capital
shared risks
increased liquidity
extended decision-making
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