business forms Flashcards
advantages, disadvantages, functions
advantages of being a sole trader
-quick & easy to set up and make decisions
-owner has complete control over decision-making
-keep 100% of profits
-no info is public
disadvantages of being a sole trader
-unlimited liability
-won’t benefit from eos
-no sick/holiday pay
-difficult to raise money
advantages of being a ltd
-limited liability
-sell shares to family and friends
disadvantages of being a ltd
-accounts aren’t private
-more expensive than a sole trader to set up
-can’t sell shares on the stock market, limiting funds
advantages of being a plc
-limited liability
-can sell shares to public, raising funds
-investors are more likely to lend more cash
disadvantages of being a plc
-more expensive
-needs to publish info
objectives of a public sector
serve the public
objectives of a private sector
survive
maximise profits
growth
dividends for shareholders
features of non-profit organisations (charities)
-puts all profits into the cause, not shareholders
-run by volunteers
-social objectives
features of non-profit organisations (mutual)
-works for the benefit of a select group of people, not general public
-revenues come from membership fees
-examples are unions
reasons for choosing diff business forms
-for the protection of limited liability, such as a construction company, so they sue the business not the individual
-objectives of the business
-nature of the business
- what products and services are being offered
reasons for changing business form
-raise finance ( e.g sole trader -> ltd to sell shares or ltd -> plc to sell more share son stock market )
what is limited liability
- owner is a seperate legal identity to the business and is not liable for payment of debts from personal debts
what is unlimited liability
-the owner is responsible for any debts of the business and has to use personal assets (car, house etc. ) to repay
why do shareholders invest?
-in hope of return on investment in the form of dividends
