Forms of business

Question 1

What are 7 forms of a business?

Answer 1

• sole trader
• partnership
• limited companies
• private limited company
• franchising
• online business
• public limited company

Question 2

What are sole traders?

Answer 2

It has one owner but can employ any number of employees

Question 3

What are pros and cons to sole traders?

Answer 3

Pro- owner keeps all profit, owner has complete control, business can be flexible and adapt to change quick
easy to set up

Con- unlimited liability, owner may struggle to raise finance, usually too small for Eos

Question 4

What is a partnership?

Answer 4

Has more then one owner

Question 5

What are the pros and cons of partnerships?

Answer 5

Pros- easy to set up, partners may specialise in different areas, easier to raise more finance

Cons- unlimited liability, have to share profits, partners may disagree and fall out, limited growth

Question 6

What is a limited company?

Answer 6

Has separate legal identity from its owners. Capital is raised by selling shares and there is limited liability

Question 7

What is a private limited company?

Answer 7

A private limited company are companies where ownerships of shares is restricted. Usually have ltds on end of them

Question 8

What are the pros and cons of private limited company?

Answer 8

Pros- limited liability, more capital can be raised by issuing shares, control cannot be lost to outsiders

Cons- have to publish their financial information, profits shared between more members, high set up costs