Business Structures Flashcards
What does the primary sector do?
- direct use of natural resources
- production of basic materials
- red collar
What is an example of the primary sector?
Agriculture, forestry, mining, oil, growing crops
What does the secondary sector do?
- transforming raw materials into finished products
- manufacturing, processing, construction
- blue collar
What is an example of the secondary sector?
- manufacturing of TV sets, ice creams etc.
- construction of roads, bridges, schools etc
What does the tertiary sector encompass?
- providing services
- white collar
What is an example of the tertiary sector?
Banking, transport, direct marketing, selling of products
What does the quarternary sector encompass?
- through technology, Internet and e-economy
- consists of intellectual activities
- new global economy
What is included in the quarternary sector?
- government culture
- libraries
- scientific research
- education
- information technologies
What is the quinary sector?
Branch of country’s economy where high level decisions are made
- gold collar
What people are included in the quinary sector?
- senior business executives
- government officials
- research scientists
- financial and legal consultants
What is an example of a sole trader business?
Tradespeople, market traders, small retailers
What are the advantages of being a sole trader?
- 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
What are the disadvantages of being a sole trader?
- unlimited liability
- all responsibility
- can affect personal life
- difficulty raising capital
How many people can be involved in a partnership?
Two to twenty
How is a partnership set up?
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.
Are the people in the partnership given limited liability?
No, each person in the partnership has unlimited liability.
What are examples of businesses set up as partnerships?
Solicitors, accountants, architects, doctors, family businesses
What are the advantages of a partnership over sole trader structure?
- increased capital
- risks and responsibilities shared
- added skills
How many people can be in a private company?
Two to fifty people
What has to go at the end of a private company’s name?
Pty Ltd
What does Pty mean??
Proprietary
- shares can be only offered to certain people
- shares cannot be put on the ASX
- public cannot buy shares or lend money
What does Ltd mean??
Limited
- shareholders have limited liability
What is limited liability?
It means that if the business has debts, they cannot use personal assets of the shareholders to repay the debts.
What is unlimited liability??
If the business has debts, they can use personal assets to find the business.
What is a private company regulated under??
Corporations law
What are the advantages of a limited liability company?
- limited liability
- separate legal entity, so can continue if people die or something happens to them
What is the minimum and maximum limit of a public company in terms of members?
Must have at least five members. No limit
What must a public company have at the end of their name??
Ltd
How can funds be raised in a public company?
They can be raised through a prospectus which complies with the Corporations Act.
Can public companies be listed on the stock exchange?
Yes
What are non profit organisations?
Organisations that exist with the primary motive to provide a focus and service for people with a common interest.
Is a trust a separate legal entity?
No, it has a trustee manager to manage the assets of a business for investors.
What is a unit trust?
Beneficiaries hold specific portions of the trust, called units.
Can a trust be established as a limited company??
Yes, and doing this does have some tax benefits.
What is an incorporated association?
It is an separate legal entity that is not a company.
Where do profits go in incorporated associations?
Profits are returned back to the association, not to members.
What are examples of incorporated associations?
Sporting clubs, community based groups, gardening clubs.
