3.1.2 Business Ownership Flashcards
1
Q
What is a sole trader?
A
- A person who owns a business.
- Usually are small businesses
- Can employ people
- Rely on frens and family for money or bank loans
- Unlimited liability
2
Q
what is a partnership
A
- they are owned by two or more people
- unlimited liability
- set up with the deed of partnership
- profit and dept share
3
Q
benefit of a partnership
A
- share expertise
- share responsibilities
- make difficult choices together
4
Q
disadvantages of a partnership
A
- unlimited liability
- share profit
- share dept
- disagreements
5
Q
list 3 advantages of a sole trader
A
- all profit goes to them
- be their own boss
- flexible working hours
- make your own decisions
- easiest to set up
- finance account private
6
Q
disadvantages of a sole trader
A
- all responsibilities are on you
- can be difficult to raise money needed to run the business
- responsible for all depts nobody to help in taking risks
7
Q
private limited company
A
- run by board of directors
- separate legal identity from owners
- companies finances are separate
- can only raise funds through friends and family
- not on the stock exchange limited liability
8
Q
- What is the process called when PLCs first sell their shares?
A
Flotation - like setting a boat to sail
9
Q
ltd advatages
A
- Limited liability
- Many customers view limited companies as having a higher status and are more likely to do business with them as a result
- The owners can retain the control of the business whilst employing managers to run them daily
- Owners can sell their shares and leave the business, but the company still exists and carries on trading
10
Q
ltd disadvatages
A
- Accounts must be checked by an auditor (this adds to costs)
- There are various legal procedures required to set up Ltd companies which take time and are relatively expensive
- Summary accounts must be made available to the public these can be seen by competitors
- Corporation tax has to be paid on profits made – this might be higher that sole traders or partners pay in income tax
11
Q
public limited company advantages
A
- limited liability so can easily raise finance
- Lots of different shareholders means it’s more difficult for one shareholder to take control
- high status and high prestiege
12
Q
disadvantages of a plc
A
- share how much earnings to public
- If new shareholders buy more than 50% of the shares original owners will have less control
- to set up stock market flotation is complicated and dificult
- Lots of shareholders = lots of different views for example major decisions but not day to day little things
13
Q
what is a not for profit business
A
- A organisation that doesn’t earn profit for owners but for people in the communities or voluntary organisation like rspcs
- They are set up for other objectives other than making profit for the owners.
- funds will need to be raised any surplus money they put it back in the business to further help the good cause not for themselves
- They have strict laws and administration
- To be classed as a social enterprise at least 50%of the extra money has to be reinvested into activities to help the social need the biasness objective
14
Q
factors effecting legal structures
A
- sources of finance
- investment protection
- control of business
- growth
- type of business
- size of business
15
Q
A
