business ownership Flashcards
what’s is the public sector
organisations owned and controlled by the government
give examples of the public sector
armed forces, education.
what are the aim and objectives of the public sector
provide a service
improve accessibility to others
avoid wasteful duplication of recourses
what is the private sector and give examples
businesses run by private individuals
sole trader, partnerships, Ltd’s and Plc’s
what is the deed of partnership
a legal document which is an agreement between partners that sets out the rules of the partnership, such as how the profits will be divided and how the partnership will be valued if someone wants to leave
what does the deed of partnership contain
names of partners
how profits are going to be shared
suggests how it can help overcome partnership problems
show proportion of ownerships to determine distribution of profits
show duties/responsibility of partnership indicating who does what
liability of partners in case of business debts
conditions for end of partnerships to show distribution of assets
what is unlimited liability
means that the owners of a business are responsible for all of the debts of a business. personal belongings may need to be given up to pay the debts of the business
what is limited liability
when the owners of a business are not responsible for the debts of a business. personal belonging will not needed to be given up to pay the debts of the business. the owners however will lose the money they invested in the business if it fails
what is a private limited company
businesses which are owned by shareholders who have limited liability. their shares are not available to others except with the agreement of other share holders. they are generally recognised with Ltd after the business name
what are the advantages of a private limited company (LTD)
Limited liability - liable only for money invested if business fails the owner will not lose personal possession
continuity - business will not end if one of the shareholders / owners leave
more capital - by selling shares maybe be easier to enter bank loans
specialised management - shareholder / owners / managers can do the work they are skilled at
invited shareholders- able to maintain control
divorce of ownership and control possible - the owner may not spend all time managing
what does dividends mean
the term for the share of the profits of limited companies and co-operatives
what is meant by charity
organisation set up to provide help and raise money for those disadvantaged in society
they are not established to make profits but they can earn surpluses
charities can often have a narrow focus (single issue) in what they are trying to achieve
charities raise the majority of their finances through voluntary donations, but more and more charities now operate retail outlets as well
what is a public limited company
businesses which are owned by shareholders who have limited liability. their shares are available to others by selling to the general public often to the stock exchange. they are generally recognised with plc after the business name
what is a sole trader
businesses owned by one person who has limited liability. other people can be employed but there is only one owner.
what are the features of a partnership
a business that is owned by between 2 and 20 people
a business that is owned/run by at least 2 people
an unincorporated business
a business with limited liability
compare the public sector and the private sector
PUBLIC SECTOR
public provides goods
not affected by recession
helps reduce inequality in society
PRIVATE SECTOR
profit incentive to be efficient
entrepreneurs create jobs where needed
doesn’t require taxes to fund
what are the advantages of being a sole trader
profit - can keep all profit / no need to share
making decisions - without consulting others / will be speedy
own boss - free to choose what they want to do (hours working)
independence - can work at own place
easy to set up - few formalities therefore cheaper to set up
have a job - may not be able to find a job else where
what are the disadvantages of being a sole trader
unlimited liability - responsible for debts of the business
more responsibility - relies heavily on their own ability to make decisions may work long hours and have limited holidays as there is no one to cover them
limited sources of recourses
what are the advantages of partnerships
raise more capital than sole traders - individuals may not be able to raise sufficient capital alone
extra skills / expertises in business - may be able to specialise in aspects of business to provide a better service
more people to make decisions - maybe be able to specialise in aspects of business to provide a better service
shared responsibility and more flexibility - reduced pressure on individuals such as duties / working hours able to take time off and debts / losses can be shared
easy to set up - may involve no legal requirements. deeds of partnerships possible
what are the disadvantages of partnerships
partners may disagree - time used up in discussion and decisions may take longer
profits will be shared - compared to a sole trader where the owner can keep all profits to themselves
some partners may not work as hard as others may - may demoralise and lead to sediments
the owners will still have unlimited liability - the partners will be held responsible for the debts of the business
continuity - applies to a sole trader but effects on surviving partners if one leaves
what are the disadvantages of private limited companies (LTD)
legal procedures in setting up takes time and costs money
profits have to be shared with other share holders
slower decision making - especially if all shareholders have to be consulted
having to disclose the accounts - financial information filed with the registrar can be looked at by the public / competitors
what are the advantages of public limited companies (PLC)
what are the disadvantages of Public limited companies (Plc)
what is a social enterprise
social enterprises are businesses which operate for the benefit of the community, or its workers, or as a charity
