Business Ownerships Test Flashcards
What is a sole trader ?
A business that is owned and controlled by one person - although they may employ workers.
what is a partnership?
partnerships are businesses owned by 2-20.
advantages of sole traders
very easy to set up and not much paper work, you don’t need that much money, your in control and can make your own decisions, the set up costs are low and don’t need to buy much, don’t have to share your profits, financial information is kept private to the owner
disadvantages of sole traders
if you want to go on holiday or if your feeling ill you have no one to cover or help which will mean no profit, banks won’t trust sole traders as much, unlimited liability - owner will have to pay for any debts of the business, only one owner to invest.
advantages of a partnership
partners can bring together all of their skills and experiences, the more people there are the more business you can take on, more access to capital (money to run the business), easy to set up, any losses will be shared.
what is a public limited company?
A PLC designates a company that has offered shares of stock to the general public. The buyers of those shares have limited liability. Meaning, they cannot be held responsible for any business losses in excess of the amount they paid for the shares.
What is a private limited company?
Limited companies can be private or public. Unlike a publicly limited company, where shares are traded on the stock exchange, a private limited company does not publicly trade shares and is limited to a maximum of 50 shareholders.
advantages of a public limited company
Access to lots of capital (money) and it’s limited liability
disadvantages of public limited companies
Shareholders can kick you out , takeover bids, it’s complicated and expensive to set up, vulnerable to take over, can loose control
advantages of a private limited company
Limited liability and it’s easy to keep control as there can’t be a takeover on the stock market
disadvantages of a private limited company
lots of paper work to set it up, have to publish your accounts each year, harder to raise capital than a public limited company
What is profit called
Profit is called a dividend, share holders receive the dividend because they provide capital.
deed of partnership:
because a partnership is a more complicated form of business ownership than a sole proprietor, most partnerships draw up a deed of partnership
What is a franchise?
A “business in a box” as well as signage and training you get the support of a national company and a brand that customers already know
What is a franchisor ?
A franchisor is an owner of the ‘brand’, the business that gives franchisees the right to sell its product, in return for a fixed sum of money or a royalty payment
