Business Structures

Question 1

What does the primary sector do?

Answer 1

• direct use of natural resources
• production of basic materials
• red collar

Question 2

What is an example of the primary sector?

Answer 2

Agriculture, forestry, mining, oil, growing crops

Question 3

What does the secondary sector do?

Answer 3

• transforming raw materials into finished products
• manufacturing, processing, construction
• blue collar

Question 4

What is an example of the secondary sector?

Answer 4

• manufacturing of TV sets, ice creams etc.

- construction of roads, bridges, schools etc

Question 5

What does the tertiary sector encompass?

Answer 5

• providing services

- white collar

Question 6

What is an example of the tertiary sector?

Answer 6

Banking, transport, direct marketing, selling of products

Question 7

What does the quarternary sector encompass?

Answer 7

• through technology, Internet and e-economy
• consists of intellectual activities
• new global economy

Question 8

What is included in the quarternary sector?

Answer 8

• government culture
• libraries
• scientific research
• education
• information technologies

Question 9

What is the quinary sector?

Answer 9

Branch of country’s economy where high level decisions are made

• gold collar

Question 10

What people are included in the quinary sector?

Answer 10

• senior business executives
• government officials
• research scientists
• financial and legal consultants

Question 11

What is an example of a sole trader business?

Answer 11

Tradespeople, market traders, small retailers

Question 12

What are the advantages of being a sole trader?

Answer 12

• you’re the boss
• you keep all the profits
• can easily start and collapse business
• maximum privacy
• can easily change legal structure
• doesn’t require a separate bank account

Question 13

What are the disadvantages of being a sole trader?

Answer 13

• unlimited liability
• all responsibility
• can affect personal life
• difficulty raising capital

Question 14

How many people can be involved in a partnership?

Answer 14

Two to twenty

Question 15

How is a partnership set up?

Answer 15

Through a written or verbal agreement that outlines how the business would be managed and operated as well as responsibilities and the sharing of profits.

Question 16

Are the people in the partnership given limited liability?

Answer 16

No, each person in the partnership has unlimited liability.

Question 17

What are examples of businesses set up as partnerships?

Answer 17

Solicitors, accountants, architects, doctors, family businesses

Question 18

What are the advantages of a partnership over sole trader structure?

Answer 18

• increased capital
• risks and responsibilities shared
• added skills

Question 19

How many people can be in a private company?

Answer 19

Two to fifty people

Question 20

What has to go at the end of a private company’s name?

Answer 20

Pty Ltd

Question 21

What does Pty mean??

Answer 21

Proprietary

• shares can be only offered to certain people
• shares cannot be put on the ASX
• public cannot buy shares or lend money

Question 22

What does Ltd mean??

Answer 22

Limited

• shareholders have limited liability

Question 23

What is limited liability?

Answer 23

It means that if the business has debts, they cannot use personal assets of the shareholders to repay the debts.

Question 24

What is unlimited liability??

Answer 24

If the business has debts, they can use personal assets to find the business.

Question 25

What is a private company regulated under??

Answer 25

Corporations law

Question 26

What are the advantages of a limited liability company?

Answer 26

• limited liability

- separate legal entity, so can continue if people die or something happens to them

Question 27

What is the minimum and maximum limit of a public company in terms of members?

Answer 27

Must have at least five members. No limit

Question 28

What must a public company have at the end of their name??

Answer 28

Ltd

Question 29

How can funds be raised in a public company?

Answer 29

They can be raised through a prospectus which complies with the Corporations Act.

Question 30

Can public companies be listed on the stock exchange?

Answer 30

Yes

Question 31

What are non profit organisations?

Answer 31

Organisations that exist with the primary motive to provide a focus and service for people with a common interest.

Question 32

Is a trust a separate legal entity?

Answer 32

No, it has a trustee manager to manage the assets of a business for investors.

Question 33

What is a unit trust?

Answer 33

Beneficiaries hold specific portions of the trust, called units.

Question 34

Can a trust be established as a limited company??

Answer 34

Yes, and doing this does have some tax benefits.

Question 35

What is an incorporated association?

Answer 35

It is an separate legal entity that is not a company.

Question 36

Where do profits go in incorporated associations?

Answer 36

Profits are returned back to the association, not to members.

Question 37

What are examples of incorporated associations?

Answer 37

Sporting clubs, community based groups, gardening clubs.