3.1.2 Flashcards
unlimited liability
no legal difference between the owner and the company, if a business goes into debt the owner is liable
sole trader
no other partners
how many people are in a partnership
2-20
sleeping partners
provide money for the business but don’t have to do anything
private limited company
shareholders are invited to purchase shares by owner, usually friends and family
public limited company
listed on stock exchange, anyone can buy shares
disadvantages of a public limited company
-media coverage can be bad
-can’t control who buys shares
-can have a hostile takeover by a rival company
not-for-profit organisation
set up to help others rather than to make profit
advantages of a sole trader
-keep all the profits
-quick and easy to set up
-flexible working hours
disadvantages of a sole trader
-can be stressful
-unlimited liability
-likely to be a small business
advantages of a partnership
-each person can contribute money
-partners can specialise in a different aspect of the business
-shared work load
disadvantages of a partnership
-unlimited liability
-rewards divided between partners
-decisions slower
deed of partnership
-how to divide profits and losses
-how much money each partner gets paid
-working arrangements for each partnership
advantages of a private limited company
-limited liability
-has more status that a sole trader
-if business founders die company still exists
disadvantages of a private limited company
-legal procedures need to be completed
-share of sales is restricted
-summary of business’ financial accounts must be published