Forms of business organizations Flashcards
Forms of business organizations in the private sector
- Sole traders
- Partnerships
- Private Limited companies
- Public Limited companies
- Co-operatives
Limited Liability
The term given to shareholders when they cannot be held responsible for debts of a company they own
Partnership agreement
Written and legal agreement between business partners
Sole traders
Business owned and operated by just 1 person
Partnerships
A group or association between 2-20 people who agree to own and run a business together
Unincorporated business
A business that does not have a separate existing legal identity (Sole traders and partnerships)
Shareholders
Owners of a limited company, shares represent part ownership of a company
Prospectus
Document issued by the directors of a company when converting to a public limited company, invitation for general public to buy shares
Annual General Meeting
Legal requirement for all companies, all shareholders may attend, vote on who they want on the board of directors for the coming year
Dividends
Payments made to shareholders from the profits of a company AFTER TAX.
Organizations in the private sector
- Close Corporations
- Joint ventures
Franchise
Business upon the use of brand names, logos, and trading methods. Franchise buys the license to operate this business from the franchisor
Organizations in the public sector
- Public Corporations
- Municipal enterprises
Sole trader Adv/Dis
ADVANTAGES
- Few legal regulations when a business is set up
- His own boss
- Freedom over working hours
- Keep all profits
DISADVANTAGES
- No one to discuss business matters
- No limited liability
- Not enough capital can be accumulated to grow the business
Partnership Adv/Dis
ADVANTAGES
- More capital from partners in the business
- Decisions can be discussed
- Responsibilities divided
DISADVANTAGES
- Disagreements on decisions
- No limited liability
