1.5.4 forms of businesses

Question 1

defintion business forms

Answer 1

legal sturcture that it takes

Question 2

limited liabilty

Answer 2

the owner of the company has n personal liability/responsibiloty over debt

Question 3

unlimited liability

Answer 3

you are the business, the business is u, owner presonally responsible for debt of company

Question 4

sole trader traits

Answer 4

business owned by one person
trnd to be small
can amply staff
unlimited liability
e.g. online traders, plumber, small shop owner

Question 5

sole trader dis/advantages

Answer 5

+ gets all money
+ is own boss –> short decisions
+ flexibility
+ easy to start

• unlimited liability, less money, no economies of scale

Question 6

partnreship

Answer 6

2-20 partners share the risk costs and responsibilities of beiing and entrepreneur
deed of partnershio –> legal document that outlines the rights, responsibilities, and obligations of each partner in a partnership
raise finance out of their own cash, assets
each one is responsible for paying tax on thier share

Question 7

sleeping partner

Answer 7

contribute capital but not involved in running the business and get share of company

Question 8

partnership dis/advantages

Answer 8

+ easier than sole trader to raise capital
+ profits go to partners which is very motivating
+ no need to make any information public

• unlimited liability
• partner may have disagreements about e.g. who is resopnsible for which debt

Question 9

private limited company ltd

Answer 9

incorporated - limited liability –> lose only original investment
can expand by selling more shares –>more capital (firends and familiy can buy shares–> part owners)
shares not bought by the public

Question 10

Ltd dis/advantages

Answer 10

+ limited liability
+extra capital by selling shares –> easier to expand
can amploy managers to run business

• accoubts of company can’t be kept private
• more complex and expensive to set up

Question 11

franchise definition

Answer 11

A franchise is a business model where a franchisor grants a franchisee the rights to operate a business using its brand, products, and processes in exchange for fees or royalties.

when a succesful business wants to expand but does not want problems of opening store it sells the business idea

Question 12

dis/advantages franchise

Answer 12

+ franchisor chooses franchisee carefully they know what characteristics to look for to make succesful
+ franchisor decides how mcuh money the franchisee must iknvest

-bound by rules
- monthly royalty payment
- no freedom of runing business how he wants

Question 13

social enterprise

Answer 13

a businesss that trades for social and or environmental puposes
profit satisfying
objective to help society or planet in some way

Question 14

lifestyle business

Answer 14

aim = provide great quality life to owner
start business doing sth they rly enjoy
allws entrepreneur liver how they want and still run a business
+ very few expenses

Question 15

online business

Answer 15

+easy to set up
+can be managed by owner from home
+ opened 24/7

-connection issues
-website maintenance
-safety issuese

Question 16

PLC public limited company

Answer 16

once company has hrwon and needs further investment –> PLC
if it intends to float its shares on the stock market so they can be bought by anyone nut first it needs to issue a prospectues where potential investors are invited to purchaseshare before floatation

Question 17

PLC dis/advanteges

Answer 17

Advantages
Access to Capital
Limited Liability
Prestige and Credibility
Transferability of Shares
Increased Market Presence
Potential for Growth and Expansion

Disadvantages
Regulatory and Compliance Costs
Loss of Control
Pressure to Perform
Vulnerability to Takeovers
Initial Costs
Short-term Focus