Business shit Flashcards
What are the three types of small business
- Manufacturing
Uses raw material, create finished products Ex. using clay to create coffe mugs. Trading Buys and sells inventory, Ex. a shop that sells computer,books or furniture. There are two types of trading business. Retailer and wholesaler Services. provides a service to customers Ex. a hairdresser, a mechanic or a solicitor
What are the legal requirements for creating a trading business?
a business is required to register for goods and service tax. Registration of a business name Register a business name with Australian securities and investments commission(ASIC). If it is just under the owners name it does not need to be registered Registered for a period of 3 years Pay a registration fee needs to be an original name
What is bankruptcy?
This occurs when a person is unable to pay their debts
Bankruptcy Act(Cwlth) 1966 also known as personal insolvency once a person becomes bankrupt this usually lasts for 3 years
Options when becoming bankrupting
- Declaration of intention ti oresent a debtors petition
- A debt agreement
- a personal insolvency agreement
- Voluntary bankruptcy
Declaration of intention to present a debtors petition?
this is a petition to the insolvency and trustee service australia ( ITSA)
Any unsecured creditor cannot take action against the debtor for 21 days
this gives debtor time to enter into agreements to make a repayment plan and hopefully avoid bankruptcy
A personal insolvancy agreement
- Agreement between debtor and creditor to repay part or all of sum owing
- must be approved by a special resolution by creditors
- no limit to size of debt
Voluntary bunkruptcy
- a person who is unable to make a repayment agreement
- once bankrupt the debtors assets will be sold to repay their debts
What is a sole trader?
- easy to establish
- does not need to share profits of the business - must pay all tax of business
partnership
- owned by 2 or more
- maximum size of up to 20 partners
- able to raise more funds than that of a sole trader
- shares the rish of a busines
Company
A company is an organisation established under the corporations act. One disadvantage to being a sole trader or in a partnership is you have unlimited liability for any debts that are incurred by the business using the company form of business structure overcomes this disadvantage as the company i its own legal entity and therefore is responsiblke for its own debts
CAPTIAL
Money invested into company is called capital
A compony limited by shares, most common for of company
proprietsary company
cannot raise money from the public
must have atleast 1 shareholder and a maximum of 50 non employee shareholders
3 conditions income less than 25 millions
assets less than 12.5 million
Has less than 50 employee
Day 3 11/2/2025
