Business Flashcards
Different forms of business structure
Sole trader
Partnership
Private company
Sole trader
Owned by 1 person
Income tax is assessed by personal tax
Advantages of sole trader
Makes all the decisions
Keeps all profits to themselves
Cheap to set up
Disadvantages of sole trader
Can be difficult to obtain finance
Unlimited liability
Partner ship
Owned by 2-20 people
Any income received is assessed according to personal tax
Profits are distributed to a predetermined formula
ie; lawyers doctors
Advantages of partner ship
Greater access to resources and money
Shares workload between partners
Disadvantages of partner ship
Unlimited liability
Can lead to disagreements about the running of the businesses between partners
Problems may arise if a partner wants to leave
Private company
1-50 private share holders
Is a separate legal entity and pays tax on any profits
has pty ltd after its name stands for propriety limited
ie; Aldi
Advantages to private company
Limited liability
Easier access to finance
A persons share can be sold if they want to leave
Disadvantages to private company
More expensive
Accounting fess are higher and have stricter reporting requirements
Less say in the day to day running of the business as there may be more owners
Private sector
The part of the national economy that is not under direct state control. ie; cafes, private doctors
Public sector
The part of an economy that is controlled by the state. ie; public education, public hospitals
Corporate social responsibility
The commitment by organisations to conduct their businesses in an ethical manner, to take responsibility for the economic, social and environmental consequences of their activities, and to be accountable to a wide range of stakeholders, including employees, customers and suppliers – now and in the future.
