Forms Of Business Pt1

Question 1

What are the 5 forms of business organizations ?

Answer 1

1.sole trader
2.partnership
3.Co-operatives
4.Companies
5.Franchise

Question 2

What is a sole trader?

Answer 2

A person who owns their own business

Question 3

Advantages of sole trader business

Answer 3

Easily and quickly formed and dissolved
Takes all profits
Pays lower personal tax and not company tax

Question 4

3 characteristics of sole trader business

Answer 4

Easy to set up
Financed by owner
Bears all the risks and keeps all profits

Question 5

Disadvantages of sole trader

Answer 5

Lack of specialized staff
Long working hours
Business dissolves if owner dies
Limited capital and it is not easy to get loans

Question 6

Formation of a sole trader organization

Answer 6

Some cases a special license is needed and some trader is usually required to register their trade name

Question 7

Management of sole trader organization

Answer 7

The sole trader

Question 8

What is a partnership ?

Answer 8

A partnership is an association between 2-20 people operating a business with the common goal of making a profit

Question 9

Characteristics of a partnership

Answer 9

Min of 2 and max of 20
Capital is provided by partners
A limited partner cannot take part in management
Profits are shared equally unless stated in agreement

Question 10

What are the two types of partnership?

Answer 10

Ordinary and limited

Question 11

What happens in a ordinary and limited partnership

Answer 11

Ordinary partnership is where all profits and losses are shared equally
Limited partnership is where the limited partner stand up to lose only up to the amount which was invested.

Question 12

4 advantages and disadvantages of a partnership organization

Answer 12

Advantages:
Easy to set up
Shared workload
Pays lower personal tax not company tax
Business will not end if one partner die

Disadvantages:
Unlimited liability
Some difficulty in raising capital
Difficult in decision making
All profits must be shared equally regardless of individual effort

Question 13

Management of a partnership

Answer 13

Carried out by ordinary partners

Question 14

What is a co-operative?

Answer 14

Businesses that are formed,owned and operated by its members

Question 15

3 characteristics of co-operative

Answer 15

The members are the clients
All member have a vote
Limited interest on money invested

Question 16

3 types of co-operatives

Answer 16

Financial ,consumer and agricultural

Question 17

3 advantages and disadvantages of co-operative organization

Answer 17

Advantages:
Shared decision making
All profits shared among members
Employment is provided

Disadvantages:
Growth can be hindered because of poor,inexperienced and unqualified management
Slow decision making because of conflict
Unable to attract skilled professionals

Question 18

Formation of co-operative

Answer 18

Each member purchases shares to form the capital bade if the co-operative

Question 19

Management of co-operative

Answer 19

They are governed by the membership through a management board elected bu members