2.1.3 Liability - Limited Liability + Finances appropriate Flashcards
Liabilities
The debts that are owed by a business
Shareholders. What do they get a part of & what can they do.
A person, company or organisation that own shares in a company.
-They get part of the company profits and can vote regarding who and how runs the company
-Classed as owners
Limited liability
What do the owners and the business have that are separate?
A legal status in which a business owner is only liable for their original investment should the business fail
Owners and the business have separate legal identities
What are the Shareholders (owners) of a business only liable for if they own a limited company
Only liable to fixed sum they invested in a business
- most they can lose is JUST the company
What type of businesses is a limited liability business
An incorporated business
Incorporated business
A business model in which the business and the owner have separate legal identities
-Owners of the business have limited liability whereas the business doesn’t
Shareholders objectives
investors + purely have a financial interest.
they invest their money in hopes to get financial return.
What types of companies have limited liability
Private limited company (Owned by a few shareholders)
Public limited company (Owned by many shareholders)
What are the implications of a limited liability business
Relating to financing
Why
Businesses with limited liability will usually find it much easier to attract and raise larger amounts of finances e.g Venture capital, share capital
Because they will only lose as much as they have put it
Finances available to Limited Liability businesses
- Share capital
- Business Angels
- Venture capital
- Bank loans (?)
- Retained profits (almost always used in every business) - direct from the owners
