Business Structure

Question 1

Types of businesses

Answer 1

• Sole trader
• Partnerships
• Proprietary
• Public limited company
• Cooperative
• Franchise

Question 2

Sole trader

Answer 2

• Where a single individual is legally responsible for all aspects of the business, has full control of assets and business decisions
• Unlimited liability – All personal assets are at risk if something goes wrong and personally reliable for paying tax on income earned

Question 3

Partnership

Answer 3

• Involves up to 20 people who run a business together
• Control and management of the business is shared among the partners, all liable for debts of the business
• Requires a separate tax file number

Question 4

Proprietary

Answer 4

• A form of a privately held company where the shares may not be offered to the public for sale
• Cannot have more than 50 shareholders
• Liability of shareholders is limited to the value of shares
• Money earned belongs to the company
• Higher setup and running costs

Question 5

Public limited company

Answer 5

• A limited liability company that has offered shares to the general public

Question 6

Cooperative

Answer 6

• A farm, business, or other organisation which is owned and run jointly by its members, who share the profits or benefits
• Each member contributes equity capital
• Each member shares in the control of the business

Question 7

Franchise

Answer 7

A type oflicensethat a party (franchisee) acquires to allow them to have access to a business’s (thefranchiser) proprietary knowledge, processes andtrademarksin order to allow the party to sell a product or provide a service under the business’s name.