chp 4 Types of business organisations

Question 1

6 points

Types of business organisations

Answer 1

1) Sole trader/ proprietor
2) Partnership
3)Private limited company
4)Public limited company
5) Joint ventures
6)Franchises

Question 2

Definition: Sole trader

Answer 2

A business owned by one person

Question 3

6 points

Advantages : Sole trader

Answer 3

**Advantages: **

1) Few legal formalities to set it up
2) Sole trader has complete control (own boss)
3) Choose their own holidays
4) No need to share profits
5) Close contact with customers
6) No need to share info about the business

Question 4

6 points

Disadvantages: Sole trader

Answer 4

Disadvantages:

1) Unlimited liability
2) Restricted capital invested in the business
3) Hence business cannot expand much
4) No one to discuss decisions
5) No one can take over the business if sole trader falls sick or dies
6) No seperate legal identity

3rd point is analysis

Question 5

Definition:Partnership

Answer 5

Partnership is a form of business in which two or more people agree to jointly own a business

Question 6

Advantages: Partnership

Answer 6

Advantages:

1. More capital can be invested into the business (in comparison to sole trader)
2. Responsibilites are shared
3. More motivation (because both benefit from profit, both suffer from loss)
4. Absences are not a problem (unlike sole trader)
5. Simple to set up

Question 7

Disadvantages: Partnership

Answer 7

Disadvantages:

1) Unlimited liability
2) No seperate legal identity
3) Time consuming decision-making
4) Disagreements between partners
5) Partner could be inefficient or dishonest
6) Growth limited to capital invested by partners