Chapter 5 CON.

Question 1

4 types of legal business structures

Answer 1

-sole trader
-partnership
-private limited company
-public listed company

Question 2

benefits of sole trader

Answer 2

-simple an most inexpensive
-owner has control over all business decision
-owner entitled to all profits and capital
-minimal legal paperwork required to start up

Question 3

limitations of sole trader

Answer 3

-owner is exposed to ‘unlimited liability’
-business may be limited to expertise
-difficulties in raising finance required

Question 4

benefits of partnership

Answer 4

-simple and inexpensive
-increased access to capital, knowledge, skills and experience of partners.
-more flexible than sole trader

Question 5

limitations of partnership

Answer 5

-potential for conflicts/disputes
-no perpetuity
-owners exposed to ‘unlimited liability’
-ownership transfer and bringing in a new partner can be complex

Question 6

what must owners do to establish a company

Answer 6

go through a process of incorporation, which legally declares a corporate entity as being separate from its owners.

Question 7

what are the two forms of companies

Answer 7

private limited company
public listed company

Question 8

what is a private limited (proprietary) company

Answer 8

-an incorporated legal entity that has a maximium of 50 sharholers and these shares cannot be traded without the permission of other share holders
-‘Pty.Ltd’ (proprietary limited)

Question 9

benefits of private limited comapny

Answer 9

-owners have a limited liability
-capital can be more easily raised by issuing more shares
-business has perpetuity

Question 10

limitations of private limited company

Answer 10

-highly complex to establish
-higher establishment costs
-higher degree of government regulation and reporting requirements

Question 11

public listed company (Ltd.)

Answer 11

an incorporated legal entity whose shares are freely traded on the Australian security’s exchange (ASX) for any member of the public

Question 12

benefits of public listed company

Answer 12

-owners have limited liability
-able to gain extra capital through selling shares
-business has perpetuity

Question 13

limitations of public listed company

Answer 13

-highly complex to establish
-higher establishment costs
-higher degree of government regulation and reporting requirements

Question 14

what are 5 business support services

Answer 14

-legal and financial support services
-tech support services
-community-based support services
-formal and informal business networks
-business mentors

Question 15

legal and financial support

Answer 15

prior to starting a business, the owner will (in most cases) seek legal and financial advice to ensure the business is properly planned out

Question 16

technological support

Answer 16

owners may seek tech support, including:
-establishing online website
-backing up services and info
-maximizing use of mobile devices

Question 17

community-based support

Answer 17

can include access to business centers and business incubators

Question 18

business centres

Answer 18

provide advice and support, access to networks of business people, workshops, seminars, etc.

Question 19

business incubators

Answer 19

are businesses that support new businesses by making available business premises, office support services and training, advice and consulting support at minimal cost until the business is established

Question 20

formal business networks

Answer 20

professional (private) and government organizations

Question 21

informal business networks

Answer 21

business mentor arrangements

Question 22

what is a partnership business

Answer 22

a legal form of business ownership where two to twenty people (partners) work together