3.1.2 - Understanding Business Forms Flashcards
What do business forms link with?
Business Objectives, Stakeholders, Organisational structure.
Unincorporated Types of business
Sole trader and Partnership
Incorporated Types of Business
Private and Public Limited Company
Points on an unincorporated business
- Owner is the business (no legal difference)
- Owner has unlimited liability
- Most unincorporated business operate as a sole trader.
Points on an incorporated business
- Legal difference the business and owners
- Owners have limited ability
- Most incorporated business’s operate as plc.
Advantages of being a sole trader
Quick and easy to set up and simple to run.
Disadvantages of being a sole trader
Full personal liability and harder to raise finance.
What is unlimited liability?
This is a characteristic of unincorporated businesses. Business owners personally responsible for debts and liability of the business. If business fails owners are liable to any debts.
What is a company?
A company is a legal entity. Owners of a company are shareholders.
Advantages of limited companies
- Limited Liability
- Easier to raise finance- shares
- Stable form of Structure
Disadvantages of limited companies
- Greater admin costs
- Company info publicly disclosed
- Directors have legal duties
Name public sector companies
Small no. of companies are owned or controlled by the Gov.
E.G RBS, Network Rail
Name public sector organisations
Goods and services owned by public bodies
Funded by central and local gov.
E.G NHS, TeachFirst
What are non for profit organisations?
Business’s that trade in order to benefit community.
