Business structure

Question 1

What is Liability?

Answer 1

Liability is how much the owner is legally responsible for debts

Question 2

What is Unlimited Liability?

Answer 2

When the business and the owner are seen as one legal entity- ( Risk of losing personal assets )

Question 3

What is Limited Liability?

Answer 3

When the business and the owner are seen as 2 separate entities
-No risk of losing personal assets

Question 4

What is a Sole Trader?

Answer 4

Is a business run by one person only.

Question 5

List the advantages of a sole trader

Answer 5

1. Profit all belongs to the owner
2. Independent-can make his own decisions
3. Easy to set up
4. No paperwork needed

Question 6

List the Disadvantage of being a Sole trader

Answer 6

Unlimited liability

Question 7

What is a partnership

Answer 7

A business owned by two or more people

Question 8

List the advantages of a partnership business

Answer 8

1. Easy to set up
2. Shared ideas
3. Flexibility ( An owner can go on holiday and another owner takes charge ( vice versa) )

Question 9

List the Disadvantages of a partnership business

Answer 9

1. Unlimited liability
2. Shared profit
3. sign the deed of partnership
4. conflict between owners

Question 10

What is a Private Limited Company

Answer 10

A business that sells a smal portion of itself to investors called a ‘Share’.

Question 11

What are disadvantages of an (LTD) Private Limited Company

Answer 11

1. only sells to friends and family
2. account published on companies house ( people can see if the business is in debt for e.g )

Question 12

What is a Public Limited Company

Answer 12

Is a business that sells shares to the public allowing the public to become part owners of the company