Business Ownership Flashcards
Q: What is a sole trader?
A: A business owned and operated by one person, also known as a sole proprietor.
What are some examples of sole traders?
Plumber, electrician, cleaner, hairdresser, small shop owner.
Q: What are the advantages of being a sole trader?
A: Easy to set up, quick decision-making, keeps all profits, personal customer service, and privacy in business affairs.
Q: What are the disadvantages of being a sole trader?
A: Unlimited liability, difficult to raise capital, lack of economies of scale, no one to share ideas with, and limited skills.
Q: What does unlimited liability mean?
A: The owner is personally responsible for all business debts, which could lead to losing personal assets.
Q: What is a partnership?
A: A business owned by two or more people who share responsibilities and profits.
Q: What are some examples of partnerships?
A: Doctors, dentists, accountants, solicitors, vets.
Q: What are the advantages of partnerships?
A: More capital investment, shared skills and workload, easier to raise finance, private business information, and shared decision-making.
Q: What are the disadvantages of partnerships?
A: Unlimited liability, potential disagreements, sharing of profits, and difficulties in withdrawing from the business.
Q: What is a private limited company (Ltd)?
A: A business where shares can only be sold to family and friends, and owners have limited liability.
Q: What are the advantages of an Ltd company?
A: Limited liability, easier to raise capital, banks more willing to lend money, and more growth opportunities.
Q: What are the disadvantages of an Ltd company?
A: Must disclose financial information, expensive administrative costs, and must prepare annual accounts.
Q: What is a public limited company (Plc)?
A: A large business where shares can be bought and sold by anyone on the stock exchange.
Q: What are the advantages of a Plc?
A: Limited liability, easier to raise large amounts of capital, professional management, and growth potential.
Q: What are the disadvantages of a Plc?
A: Expensive to set up, must publish financial records, risk of losing control if another shareholder owns more than 51%.
Q: What is a not-for-profit organisation?
A: A business that focuses on a social cause rather than making a profit, though it may still generate revenue.
Q: What are the advantages of not-for-profit organisations?
: Focused on social good, tax benefits, and reinvests surplus revenue into the cause.
Q: What are the disadvantages of not-for-profit organisations?
A: Limited funding, reliance on donations, and difficulty in scaling operations.
