Business ownership Flashcards
Four main types of business ownership
Sole trader
Partnership
Private limited company
Public limited company
What is a sole trader?
A business owned by one person
Disadvantages of being a sole trader
Difficult to raise money
Owner has unlimited liability
Could have to work long hours
Advantages of being a sole trader
Owner keeps all the profit
Cheap and easy to set up
Decisions are made quickly
What is a partnership?
Two or more people that run a business (2-20 people)
Advantages of a partnership
Share losses
More ideas and skills
More people contributing finance
Disadvantages of a partnership
Share profits
Unlimited liability
Decision can be slow and cause disagreements
What is a private limited company?
It is when a owner and the company are separate legal entities (separate finances)
Disadvantages of a private limited company
It can be very time consuming to set up
Other people are able to view the business’s financial information
Advantages of a private limited company
Limited liability
Increased source of income
More expertise available
What is a public limited company?
Its a company that can sell shares to the general public
Advantages of a public limited company
Larger pool of finance
Large, stable companies so easier to get money from banks
Enhanced reputation
Disadvantages of a public limited company
Flotation is an expensive process
Company is open for take over
Competitors can see financial information
