Chapter 4 Flashcards
Sole trader
The business is owned by one person
Partnership
The business is jointly owned by two or more people.
Limited liability
The liability of owners/shareholders is limited to the amount invested. Personal
possessions are not at risk.
Incorporated business
A business with separate legal identity from its owners, e.g. a limited company.
Unincorporated business
A business without separate legal identity from its owners, e.g. a sole trader or
partnership.
Private limited company
A business owned by shareholders but it cannot sell shares to the public.
Public limited company
A business owned by shareholders but it can sell shares to the public and its shares
are tradable on the Stock Exchange.
Shareholders
The owners of a limited company.
Dividends
Payments made to shareholders from the profits (after tax) of a company.
Franchise
A business that uses, under licence, the brand name, logo and trading methods of an
existing business. The franchisor sells the licence; the franchisee buys the licence.
Joint venture
Two or more business’s start a new project together sharing capital, risks and profits.
Public corporation
A business, in the public sector, that is owned and controlled by the state (government).
Unlimited liability
If the business goes bankrupt, only the owner is responsible
Types of business organization
- sole trader
- partnership
- private limited company
- public limited company
- franchise
- join venture
Public sector corporations
Businesses owned by the government, that can sell shares.
