ch 26 Flashcards
sole trader
is a simplistic business owned by one person
legal responsibilities for sole tader
1-pay taxes and other government charges
2-once turnover reaches a certain level they must register for value-added tax
3-they need a license to trade if they are involved in activities
4-need planning permission
5-legislation for business practice
advantages
-owner keeps all the profit
-has complete control(to make all decisions)
-simple to set up no legal requirements
-flexible can adapt to change quickly
-can offer a personal service (specialized)
-may qualify for government help
disadvantages
-unlimited liability
-may struggle to raise finance
-independence may be a burden if sick no one to take over
-very long hours (stress)
-cant exploit economies of scale
partnership
a business organization owned by 2-20 people
what is the one legal requirement
deed of partnership or partnership agreement
what does the deed include
-how much capital each partner will contribute
-how profits will be shared
-the procedure for ending partnership
-how much control each partner has
advantages of partnership
-easy to set up and run with little to no legal requirement
-partner can specialize in area
-Share the burden (less stress)
-owners can raise more capital(working capital)
-not have to publish financial info
dis of partnership
-unlimited liability
-share profit
-my disagree arguments
-one partners decision can influence all the others
-limited growth potential 20 partners
limited partners
these are partners who have a limited liability they are called sleeping partners
they do not take part in any decision-making
there still must be one unlimited partner this also allows the business to exceed 20 partners
limited companies
has sperate legal identity from the owners the company has it sown assets separate from the owners
features of limited companies
-capital can be raised by selling shares these shares are entitled to a vote on the board of directors they also get dividends paid fom profits
the more shares the more control they have
-have limited liability only lose what they invested
-are run by the bored of directors
-pay corporation tax
forming a limited company has two different legal requirements
memorandum of association
article of association
memorandum of association
name
name and address of the registered office
objectives of the company and the nuture of its activities
amount of capital needed to be raised
article of association
-rights of shareholders depending on the type of share they hold
-procedure for appointing directors
-length of time directors should serve before re-election
-how often meetings are held
certificate of incorporation
this allows it to trade as a limited company
Ltd Private Limited company
end in LTD or limited
shares have to be transferred privately and can not be floated in the stock market
family and friends
directories tend to be shareholders
ad of ltd
-limited liability
-more capital by issuing of shares
-less tax
-higher stats
dis of ltd
-have to publish financial info
-setting up costs have to be met
-profit need to be shared
-takes time to transfer shares
-can raise less money then plc
franchising
a business model in which a business(the franchisor) allows another
operator(the franchisee) to trade under their name. using a license for a fee
franchisor provides a variety of services to its franchisees like
-it gives a franchise license for a product or service
-provides a recognized brand name that customers recognize and trust
-provide a start-up package that helps and advises about setting up the business
-provide materials like ingredients
-provide marketing support
-ongoing training
-more
franchisee pays a variety of fees
–initial start up fee
-percentage of sales (use of brand name)
-training and other management fees
ad to the franchisee
dis to the franchisee
ad to the franchior
dis to the franchisor
social enterprise
A business with main welfare o environmental objectives rather than maximizing profit.
they are referred to as non profit organizations
what do social enterprise include
-have a clear and/or environmental mission
-generate most of the income from trade donations
-reinvest most of there profits
-not connected to the government
-more accountable and transparent
forms
1)co-operatives they are owned and controlled by their members. members can purchase shares that entitle them to a vote at the AGM
2)worker co-op: these are businesses jointly owned by employees
3)mutual originations are owned by their customers rather than shareholders
4)charities that exist to raise money for various causes and draw attention to the needs of disadvantaged groups in society.
lifestyle
aims to raise enough money and provide the flexibility needed to pay for a particular lifestyle
features of lifestyle
small
personal interests/hobbies so its enjoyable \
running is less stressful
home based
advantages of lifestyle
-allows them to sustain their chosen lifestyle
-have a personal interest
online businesses
businesses that use the Global communications infrastructure of the internet as a trading base
features of online
-low set-up cost
-no legal requirements
-via the Internet showing prices and general info
-payments online
