Chapter 1.2 - Types of business entities Flashcards
Cooperatives
For-profit social enterprises set up, owned, and run by their members, who might be employees and/or customers
Company/corporation
A limited liability business owned by shareholders
Deed of partnership
A legal contract signed by the owners of a partnership. The formal deeds specify the name and responsibilities of each partner and their proportion of any profits or losses
Incorporation
A legal difference between the owners of a company and the business itself. Ensures that the owners are protected by limited liability
Initial public offering (IPO)
Occurs when a business sells all or part of its business to shareholders on a public stock exchange for the first time.
This changes the legal status of the business to a publicly held company
Limited liability
A restrction on the amount of money that owners of a company can lose if the business goes bankrupt
(shareholders cannot lose more than the amount they invested in the company)
Non-governmental organizations (NGOs)
Private sector not-for-profit social enterprises that operate for the benefit of others rather than primarily aiming to earn a profit
Partnerships
A type of private sector business entity owned by 2-20 people (partners).
They share the responsibilities and burdens of running and owning the business
Private sector
Part of the economy run by private individuals and businesses, rather than by the government
(sole traders, partnerships, privately held companies, publicly held companies)
Privately held company
A business owned by shareholders with limited liability but whose shares cannot be bought by or sold to the general public on a Stock Exchange
Publicly held company
An incorporated limited liability business that allows shareholders to buy and sell shares in the company via a public stock exchange
Public sector
Part of the economy controlled by the government
(state healthcare, education services, emergency services, social housing, national defence)
Sole trader
A self-employed person who runs the business on their own.
This means that they have exclusive responsibility for its success (profits) or failure (unlimited liability)
Social enterprises
Revenue-generating businesses with social objectives at the core of their operations.
Can be for-profit or non-profit business entities
(for-profit must be only used for a social purpose rather than distributed to shareholders and owners)
Stock exchange
A marketplace for trading stocks and shares of publicly held companies (public limited companies)
(London stock exchange, New York stock exchange, etc)
Unlimited liability
Feature of sole traders and ordinary partnerships who are legally liable or responsible for all money owed to their creditors, even if this means that they have to sell their personal possessions to pay for their debts
