Business Ownership Flashcards
Define a sole trader and name the pros and cons
An unincorporated business owned by an individual who is subject to unlimited liability
Pros- cheap and easy set up, owner keeps all profits
Cons- unlimited liability, limited capital for investment
Define partnerships and name the pros and cons
Two or more people who own an unincorporated business meaning they have unlimited liability
Pros- simple and flexible, risks/costs/responsibilities shared
Cons- arguments can occur in descision making, unlimited liability
Define private limited companies (ltd) and name the pros and cons
Incorporated businesses who’s shares are not traded publicly, ownership restricted to family/associates
Pros- limited liability, ltd, attracts new inverstors - ll.
Cons- costs time and money to incorporate a company (opportunity cost) accounts need to be produced every year (cost)
Define public limited companies plc name the pros and cons
Incorporated businesses who’s shares are traded publicly
Pros- protection from liabilities and debt, sell on stock market, raise more capital
Cons- slower descision making do to regulations. Loss of control of= founders get diluted
Define unlimited liability
The owner is fully responsible for all the businesses debts
Define limited liability
The amount invested in the business and the maximum that can be lost
Define not for profit organisations
What do their aims include
Manage their resources in order to achieve goals other than making profit eg charities
Aims include:
Raise awareness of social issue
- providing support
Define a social enterprise and name its pros
A business that reinvents its profits into a social or environmental mission ie business trading to create benefits
Pros a source of differentiation, customers may be willing to pay more, staff get motivated and rewarded
Define stakeholders
A group of people who have interest in a business because of its effects on them
