Chapter 1 Flashcards
Types of Businesses
Sole trader
Partnership
Limied liability partnerships
private limited company
public limited company
non for profit organisation
Which financial statements do Sole traders have
statement of profit or loss
statement of financial position
What are Sole traders responsible for
Annual income tax returns,
profit of business
if registered for VAT they have to do VAT returns
What are limited liabilities responsible for
Annual income tax returns, profit of business
if registered for VAT they have to do VAT returns for themselves individually- so each partner has to do one for their share of the profit
What do limited liabilities have to do
Have to register via company house- have to set out the agreement
statement of profit or loss
statement of financial position
auditors report
What do private limited companies have to do
have no minimum requirement for issued share capital
at least one member(shareholder)
at least one director
Have to produce:
statement of profit or loss
statement of financial position
auditors report
pros of incorporation
limited amount of liability
business is a separate entity
enhancement of credibility
access to easier funding
easier to transfer ownership
Cons of incorporation
complexity to set up
information filed on companies house is public
business finances are separate so harder to take out drawings
What is intangibility
A service that doesnt provide a physical product
What is inseparability
A service that can’t be separated from its consumption by the customer
What is perishability
any unused service cannot be stored for future use
What is variability
a service wil be tailored to the needs of an individual customer
What is a risk appetite
level of risk they are prepared to accept to achieve their objectives
