Business Structures

Question 1

What are 2 advantages of a company ?

Answer 1

Limited liability

Continuity of existence

Question 2

What are 2 advantages of a sole trader?

Answer 2

Easy to start and run.

No registration or formal documentation is required so its cheap to setup.

Question 3

What are 2 advantages of a partnership?

Answer 3

Partners can share finances

Partners can combine expertise

Question 4

What are 2 disadvantages of a company ?

Answer 4

Expensive to setup and run

Directors need to clearly understand their responsibilities

Question 5

What are 2 disadvantages of a sole trader ?

Answer 5

The owner takes all the responsibility for the business.

unlimited liability

Question 6

What are 2 disadvantages of a partnership ?

Answer 6

Profits must be shared

unlimited liability

Question 7

What is the definition of a unlimited liability?

Answer 7

If the business fails the personal assets of the owner can be used to pay business debt

Question 8

What is the definition of a limited liability?

Answer 8

If the business fails the personal assets of the owner can not used to pay business debt