Business Ownership Structures Flashcards
What is a Sole Trader?
businesses that have just 1 owner. Most small businesses are sole traders.
e.g. plumbers, hairdressers, newsagents.
What are the advantages of a Sole Trader?
Easy to set up
Get to be your own boss
Decide what happens to any profit
What are the disadvantages of a Sole Trader?
Might have to work long hours
Unlimited Liability
Unincorporated
Hard to raise money, banks see sole traders as risky
What is a Partnership?
Have between 2 to 20 partners. Each partner has an equal say in making decisions and an equal share of the profits.
What are the Advantages of a Partnership?
More owners means more ideas
Greater range of skills
More people share the work
More money can be put into the business
What are the Disadvantages of a Partnership?
Legally responsible for what all other partners do
Unlimited Liability
More disagreements
End up with less money
What type of people own Limited Companies?
Shareholders
What is a Limited Company?
Incorporated
Separate legal identity
Money, property tax bills, etc belong to the company.
The more shares you own, the more control.
What is a Private Limited Company?
Shares can only be sold if all the shareholders agree. Private Limited Company have Ltd. after there name.
What are the advantages of Ltd.?
Limited Liability (can’t lose more than you invested)
Being Incorporated
Easier to get a loan or mortgage
What are the Disadvantages of Ltd.?
More expensive to set up
Legally obliged to publish its accounts every year.
What is a Public limited Company?
company shares are traded on a stock exchange and can be bought or sold by anyone. PLC
What are the Advantages of a PLC?
Much more capital can be raised by a PLC than by any other kind of business
Helps company expand
Also Limited liability and Incorporated
