Chapter 18 - Forms of Business☀️

Question 1

What is unlimited liability?

Answer 1

If a business goes bankrupt, the sole trader will loose the business but could also loose their personal possessions e.g. House

Question 2

What is limited liability?

Answer 2

If the company is declared bankrupt, the owners will loose only what they invested. Their personal belongings are not at risk.

Question 3

What is privatisation?

Answer 3

The selling of a state owned business to the general public or to another business

Question 4

What are the legal requirements for sole traders?

Answer 4

1. Register persons own name and the shops name with the Department of Enterprise, Trade and Employment
2. Pub or taxi may need a licence

Question 5

Hat are the benefits of being a sole trader?

Answer 5

1. All profits belong to them
2. Procedures for setting up are quite simple
3. Trading hours are flexible

Question 6

What are the disadvantages of being a sole trader?

Answer 6

1. Unlimited liability
2. Must be an expert in all parts of the business
3. Shortage of money makes it hard to expand

Question 7

What are the advantages of a private limited company?

Answer 7

1. Limited liability
2. If they need to expand they sell more shares
3. Decisions are shared

Question 8

What are the disadvantages of a private limited company?

Answer 8

1. Legal requirements for setting up are expensive

2. Profits must be shared

Question 9

What are the steps to forming a limited company?

Answer 9

1. Employ a solicitor to draw up documents
2. The main documents are:
   - Memorandum of Association
   - Articles of Association
   - Form A1
3. Solicitor send them to Registrar of Companies
4. If in order, Certificate of Incorporation is issued (birth cert)

Question 10

What info in in the memorandum of association?

Answer 10

1. Aims of the company

2. A statement of limited liability

Question 11

What info is in the articles of association?

Answer 11

1. Total number of shares company can issue

2. They way the directors are elected

Question 12

Name 2 things involved in setting up a co-op

Answer 12

1. Members of co-ops have one vote regardless of how many shares they own
2. If the co-op goes bankrupt, each member only looses amount invested (limited liability)

Question 13

What are the advantages of co-operatives?

Answer 13

1. Limited Liability
2. Profits are returned to members as dividends
3. Democratic - on person, one vote

Question 14

What are the disadvantages of co-ops?

Answer 14

1. One vote per member means that people see no need to buy more shares so finance is scarce

Question 15

Name a type of co-operative.

Answer 15

Financial Co-Operative e.g. Credit Union

Question 16

What are the reasons for state owned enterprises?

Answer 16

1. To provide essential services all over the country e.g. An Post
2. Some industries need lots of money to start up e.g. ESB
3. To develop natural resources e.g. Bord na Mona

Question 17

What are the benefits of privatisation?

Answer 17

1. Both the government and the country benefit as the sake of companies brings in millions of euro to the government
2. Successful companies can attract top management