Business Structures Flashcards
1
Q
What is the definition of unlimited liability?
A
If the business fails the personal assets of the owner can be used to pay business debts.
2
Q
What is the definition of limited liability?
A
If the business fails the personal assets of the owner cannot be used to pay business debts.
3
Q
What are 2 advantages of a company?
A
- More credibility in the marketplace
- Easier to attract funds and investment (investors can become shareholders)
4
Q
What are 2 advantages of a partnership?
A
- No registration is required to start a partnership
- Expertise is shared
5
Q
What are 2 advantages of a sole trader?
A
- Easy to start and run
- No registration or formal documentation is required
6
Q
What are 2 disadvantages of a company?
A
- Directors need to clearly understand their responsibilities
- Control is divided or shared
7
Q
What are 2 disadvantages of a partnership?
A
- Possible partnership conflicts
- Control is shared
8
Q
What are 2 disadvantages of a sole trader?
A
- Sole traders can lack credibility in the market place
- Harder to sell the business
