Choosing The Right Legal Structure Flashcards
What is an incorporated business?
Identity of the business is separate from the owners.
What is an unincorporated business?
The identity of the business and the owner are the same.
What is unlimited liability?
The owner can have personal possessions removed in order to pay for debts of the business.
What is limited liability?
Can only lose what you put into the business.
What is a sole trader?
A business owned by one person.
What is a partnership?
Two or more people run the business.
What is a private limited company?
Small/medium sized business run by small group of individuals
Must have ltd in name
Cannot exchange shares on stock exchange
Can keep affairs reasonably private
What is a public limited company?
Has limited liability
Has to have at least 2 shareholders
Must have plc after name
Can exchange shares on stock exchange
What is an advantage of changing from a private company to a plc?
Extra funds for growth
What are the disadvantages of changing from a private company to a plc?
Loss of control
Continual scrutiny
Possible takeover pressure
What is ownership?
Providing finance and therefore taking risks.
What is control?
Managing the organisation and making decisions.
What are the characteristics of not-for-profit organisations?
Non-governmental organisations
Have a governing body responsible for managing affairs
Have social/environmental aims and objectives
Established for purpose, not financial gain
Use volunteer staff instead of paid employees
