Business Ownership Flashcards
What is Liability?
Being legally responsible for something.
What is Unlimited Liability?
Full legal responsibility for all business debts.
If the business cannot pay the debt, the business owner must go into their personal savings and their belonging will be sold to make up for it.
What is Limited Liability?
Legal responsibility of a Business is shared.
Shareholders will not risk having their personal belongings sold for the Business’ debts.
What is a Sole Trader?
When a business is owned and ran by one person.
What is a Partnership?
A type of business that is owned and ran by 2 or more people.
What is a Ltd?
Private Limited Company.
What is a Plc?
Public Limited Company
What are some Advantages of being a Sole Trader?
Quick and Easy to setup
Full control over their business.
Being their own boss
Low set-up costs.
What are some Disadvantages of being a Sole Trader?
Unlimited Liability
Pay Income tax
Long hours, stressful
Owner will have to play many different roles in the business.
What are some Advantages of being in a Partnership?
Limited Liability
Quick and easy to setup
Combined skills and knowledge
What are some Disadvantages of being in a Partnership?
Conflict between owners
One partner may let another down by not working as hard.
Pay income tax
What are some Advantages of being an Ltd?
Limited Liability
Be their own boss
New shareholders must be invited, protects the business from outside influence
Shares can be sold - not on the stock market
What are some Disadvantages of being an Ltd?
Business may need outside professional help to manage finances
Very time consuming and costly to setup - Companies House
The public are able to view the business’ financial records
Pay corporation tax
What is the Companies House?
Any Limited or Partnership business has to register with Companies House.
This is very time-consuming, costly and the records are public.
What are some Advantages of being a Plc?
Shares float on the stock exchange
Raise money through Share Capital
Limited Liability
