2B Types Of Buisnesses

Question 1

Soul trader

Answer 1

Is a business structure there is owned and operated by one individual.

has full decision-making power and is legally responsible for all aspects of the business.

It is the cheapest and simplest type of business to operate as a sole trader.

The owner and business are considered as the same legal entity.

Question 2

What does legal entity mean?

Answer 2

They are unincorporated and therefore have unlimited liability


Question 3

What does unincorporated mean

Answer 3

Unincorporated is the business owner and the business being viewed as the same legal entity

Question 4

What does unlimited liability mean?

Answer 4

With the business owner and the business being viewed the same legal entity (unincorporated) this means that the business owner has held personal responsibility for the business debts making meaning they therefore have unlimited liability

Question 5

What is the business owner of a sole trader in entitled to?

Answer 5

Business profits after personal income tax has been paid

Question 6

What are the risks of being a sole trader?

Answer 6

There’s a high-level of risk as the owners invest their personal savings into the business.

There is a high-level of risk as the owner has unlimited liability meaning their personal assets could be seized to pay business debts

Question 7

Resource factors affecting the choice of the business structure

Answer 7

The skills and expertise required for the business decisions are limited to the knowledge of the owner.

Financial resources are limited to the sole traders personal finances as it could be more difficult to obtain low from financial institutions.

Question 8

Factors affecting the choice of business structure: level of control

Answer 8

There’s a high-level of control as the owner has full power over all business decisions

Question 9

Factors affecting the choice of business structure cost

Answer 9

Low setup cost and the owner can retain all of the business profits

Question 10

What are the advantages of a sole trader business?

Answer 10

The Arness full control and decision-making power.

there was low risk of disputes as there is only one owner making decisions

Question 11

What are the disadvantages of a sole trader business?

Answer 11

Unlimited liability puts the owners personal assets at risk as they can be ceased to pay off business debts.

The knowledge and skills are limited to the owner meaning the owner may not have an appropriate expert in various areas

the life of a business ends when the owner dies.

Question 12

Advantages of a soul trader business: time

Answer 12

Easy and simple to register and set up

few reporting requirements and minimum government regulation

other owners do not need to be consulted when making decisions therefore decision-making can be quick

Question 13

Disadvantages of a celebrated business: time

Answer 13

It may be difficult to take time off work for holidays or see as no one else can operate the business

Question 14

Advantages of a sole trader business:money

Answer 14

Least expensive type of business to set up

the owner can retain all business profits

Question 15

Disadvantages of a sole trader business: money

Answer 15

Difficult to raise money to expand the business due to being limited to the owners personal savings.

It also can be difficult to access money from financial institutions.

Question 16

What is a partnership?

Answer 16

Is a business structure that is owned by 20 or more owners

partnership structure is unincorporated and all the owners have unlimited liability over business debts

is inexpensive to establish. Having multiple business.

Having multiple business owners means responsible financial risks of the business venture shared

the resource and expertise of partners are combined

each partner must pay personal income tax on the shares of the profits.

Question 17

What is the common agreement used in partnership?

Answer 17

Partnership agreement

Question 18

What is the partnership? Agree?

Answer 18

Is a document signed by all of the partners and includes partner details, distribution of profit , responsibilities of each partner and financial contributions from each partner.

Question 19

Factors affecting the choice of a business structure partnership: risk

Answer 19

Risk is shared between all partners

partners are all held personally responsible for business debt

Question 20

Factors affecting the choice of a business structure partnership: resources

Answer 20

There’s a great to access to skills expertise by having multiple partners

financially resources can be contributed by all partners which can result in greater access to money for the business

Question 21

Factors affecting the choice of structure partnership: level of control

Answer 21

Control and decision-making shared between the partners

Question 22

Factors affecting the choice of business structure: partnership - cost

Answer 22

Low set up costs

Question 23

Advantages of a partnership: business

Answer 23

Greater range expertise ideas amongst numerous partners

the financial legal risks are shared between partners

Question 24

Disadvantages to a partnership: business

Answer 24

A limited liability means that the partners personal assets are at risk as they can be seized to pay off business.

Debts conflict could arise due to share decision-making and personality clashes amongst

Question 25

Advantages to a partnership: time

Answer 25

Owners can share the workload and take time off as there are multiple people that can manage the business

easy and simple to register and set up your reporting requirements and minimal government regulation

Question 26

Disadvantages to a partnership: time

Answer 26

If one partner leaves it could be time-consuming to restructure the partnership

Question 27

Advantages of a partnership: money

Answer 27

Great access to finances as there are more people involved
minimal start-up cost

Question 28

Disadvantages to a partnership: money

Answer 28

Profits need to be shared between the partners

liability for debts incurred by other partners is held by all the partners

Question 29

What is a private limited company?

Answer 29

Incorporated business structure that has at least one Director and maximum 50 shareholders

the shareholders need to be specifically selected and approved by the board of directors

owners are referred to as shareholders as their own shares in the business

shareholders expect to make return on their original investment by receiving dividends However prior share holders receiving returns on their shares the companies profit subject company tax

shareholders can sell their shares to people approved by the business of the company

The shareholders of the company have private ownership and limited liability over the business debts.

Question 30

What are dividends?

Answer 30

A regular sum of money paid out to shareholders from a companies profit

Question 31

What does incorporated

Answer 31

A business being established as a separate legal institute from the owners

Question 32

What does limited liability mean?

Answer 32

Is when shareholders are only liable to the extent of their original investment many they’re not personally responsible for the business debts