COMANY TYPES Flashcards
What is a sole trader?
A sole trader is a business owned by one person
Advantages of being a sole trader
Owners is responsible for all decisions, they are their own boss
Easiest and least expensive form of ownership to establish
Owner does not have share profit with other owners
Disadvantages of being a sole trader
Business is not separate entity; there owner is liable for all debts and losses
One person may not have to expand or franchise business
If the owner is ill, or absent no one is there to replace them
Advantages of a partnership
Two or more partners may be able to raise more money than sole trader
Partners are able to share the risks of the business and any losses
Bring together people with specialist skills and knowledge
Disadvantages of a partnership
Profits must be shared between all owners
Conflict over business policy and personality clashes mean that business decision take time to reach
Advantages of Small proprietary business
Have a separate legal existence from its owners
Generally easier to raise capital because there are more potential owners
Disadvantages of Small proprietary business
They can be difficult to dissolve
Greater regulation than sole trader or partnership
Record keeping and reporting are demanding than sole trader or partnership
What is a partnership
A partnership, other than a company, that is owned by two or more persons. The number of of members of a partnership are limited by law. Max is 20
What is a proprietary company
Proprietary company is a company that cannot raise money from the public. They must have at least one shareholder and a maximum of 50 non-employee shareholders. The word “Proprietary” or “pty” must be included in company’s name
A small proprietary company must satisfy two of three condition. What are name the three conditions?
1.Revenue for year is less than 25 million
2.Assets at the end of the year are less than 12.5 million
3.Company has less than 50 employees at the end of the year
What is manufacturing ?
Many buisness earn profit by purchasing raw materials or compenets and converting them into products, which are then sold on to other buisnesss or in some cases directly to customers.
What is trading/retailing?
Trading/retailing is sometimes called merchandising. It includes businesses that sell goods in bulk to to other business(wholesalers) and business that sell direct to the public(retailers). Such business generate profit by purchasing stock and reselling it a higher price.
What is service providing?
Sort of business generates profit by providing a service to its customers. The value and treatment of stock are not significant. The income statement for a service business will not include a gross margin or profit such, although many business will separately identify the direct cost of providing the service compared with the overheads, such as office salaries and rent.
GST ACT 1999(WA)
Goods and Services Tax(GST Act 1999) is a broad-based tax of 10% that is charged on most goods and services
A business that has annual sales of 75,000(non-profit 150,000) must register with Australian Taxation Office to collect GST. Charge GST on all products and services, unless they are deemed GST free
