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Business A-level > Forms of a business > Flashcards

Forms of a business Flashcards

1
Q

What does unincorporated?

A
  • the owner is the business
  • owner has unlimited liability for business actions
  • most unincorporated business operate as sole traders
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2
Q

What is corporated?

A
  • there is a legal differnace between the business and owners
  • company has seperate legal identity
  • owners has limited liability
  • most incorporated businesses operate as private limited companies
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3
Q

What does unlimited liability mean?

A

this means the owners of the business are personally responsible for all debts run up by the business

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4
Q

What are sole traders?

A
  • individuals who owns and runs their own business
  • registered as self employed
  • legally required to keep a record of information
  • has unlimited liability
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5
Q

advantages of being a sole trader?

A
  • sole trader has full control
  • sole trader gets all profit
  • easier to set up as dont have to go through government
  • flexible working times
  • minimal paperwork
  • simple to run
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6
Q

What are the disadvantages of sole traders?

A
  • if debt is owed can go into sole traders assets
  • hard to raise finance
  • lack of support
  • time consuming as soletrader
  • if ill or cant work, no income
  • has to pay income tax
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7
Q

What is a partnership?

A
  • two or more people share costs, risks and responsibilities of being in business togetjer
  • register as self employed
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8
Q

What are benefits of being in partnership?

A
  • risks, costs and responsibilities are shared
  • more scope for specialist skills
  • simple and flexible
  • financial records remain private
  • more capital can be raised then a sole trader
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9
Q

Drawbacks of a partnership?

A
  • unlimited liability
  • arguements can occur with decision making
  • if a partner dies, resigns or goes bankrupt the partnership is dissolved
  • have to have trust
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10
Q

What is limited liability?

A

a shareholder can only lose the value of their investment in the share capital of the company

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11
Q

What are the disadvantages of being a company?

A
  • owners have to make documents

- has to register

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12
Q

Advanatges of being a company?

A
  • own legal identity which is separate from its owners

- has limited liability

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13
Q

What is the process of forming a company called?

A

incorporation

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14
Q

How do shareholders benifit from a company?

A
  • share from profits (dividends)

- when sell share, worth more then bought for

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15
Q

Explain private limited companies?

A
  • have LTD after name
  • cheap to set up
  • have limited liability
  • owners can place restrictions on who the shares are sold to in the future
  • shares not sold publicly, private sales only
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16
Q

advantages of private limited companies?

A
  • limited liability
  • easier to raise finance
  • stable form of structure
17
Q

Disadvantages of private limited companies?

A
  • greater administration costs
  • public disclosure of company information
  • directors legal duties
18
Q

describe public limited companies?

A
  • have PLC after the name
  • usually larger then LTD
  • shares are traded publicaly
  • minimum capital requirement of £50000
  • accounts published in more detail than a LTD
  • flotation on the stock market provides sudden, huge injection of cash
19
Q

How can you measure the size of a plc?

A

market capitalization

20
Q

What is market capitalisation?

A

total value pf all the issued shares in a public limited company

share price X number of shares issued

21
Q

what is a franchise?

A

when a franchisor grants a licence to another business (franchisee) to allow it trade using brand/ business format

22
Q

Benifits of the franchisor

A
  • can accelerate the growth of a proven service business format
  • enables rapid geographical growth for minimum investments
  • still have an option to open solus branches
  • can get above normal profits
23
Q

Benifits to a franchisee?

A
  • still your own business
  • tested and developed format and brand
  • advice, support, trianing
  • easier to raise finance
  • no industry expertise required
  • buying power of franchisor
  • lower risk method of market entry
24
Q

Drawbacks for the franchisee?

A
  • not cheap, initial fee
  • restrictions on actions, inculding selling
  • problems selling business on
  • what happens if franchisor fails
25
Q

What are not for profit organisations?

A

business that trade in order to benefit the community

26
Q

What are lifestyle businesses?

A
  • a business that generates a ‘living’ for the owners
  • most often operated as an unincorporated business
  • business objectives are less important
27
Q

What are private sector organisation?

A
  • controlled by the government
28
Q

What are not-for- profit organisation?

A

Business A-level (29 decks)

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