Forms of ownership Flashcards
1
Q
what to consider when choosing form of ownership
A
- start-up cost/future capital
- size/nature of business
- tax
- how businesses = controlled/managed
- risk involved
- how capital = contributed
- how profits/losses are shared
- who is resp. for debts/liabilities
2
Q
entrepreneur
A
people who find opportunities, calculate risks and then create a business
3
Q
qualities of an entrepreneur
A
want responsibility good leadership/management skills perseverance high energy organized passion flexibility self - confidence commited independant risk takers strong work ethic innovative/creative willpower 2 overcome obstacles clear vision
4
Q
profit vs non profit organisations
A
profit
- aim = to make profit
- capital = contributed by owners
- pay tax
non- profit
- aim = promote social cause
- funds from donations and gov grant = capital
- no tax
5
Q
adv vs disadv of a sole proprietor
A
adv - easy, cheap - easy/quick desicion making - owners = full profit disadv - unlimited liability - no legal personality - no continuity - owner = all risks - overworked - capital = limited no job security
6
Q
adv vs disadv of a partnership
A
adv
- easy/cheap to start
- more capital than sole trader and easier to get credit
- liabilities/responsibilities = shared
disadv
- unlimited liability
- no legal personality
- no continuity
- disagreements betw partners
- decisions take longer
- capital = limited to no. of partners allowed to contribute
7
Q
adv vs disadv of a Close corporation
A
adv
- limited liability
- legal personality
- continuity
- easy/cheap to start
disadv
- capital contribution= limited to 10 members
- liable for losses
- financial audit for loans
- decisions take longer
- more chance of conflict
8
Q
adv vs disadv of a private company
A
adv
- limited liability
- legal personality
- continuity
- more capital bc more shareholders
- no AGM
disadv
- complex start
- no capital from public
- double taxation
- yearly financial statements = reviewed by professional, which means more expenses
9
Q
adv vs disadv of a personal liability company
A
adv
- limited liability
- legal personality
- continuity
- no AGM
disadv
- complex start
- no capital from public
- double taxation
- yearly financial statements = reviewed by professional, which means more expenses
10
Q
adv vs disadv of a public company
A
adv
- limited liability
- legal personality
- continuity
- capital from public
- attract skilled workers bc can pay well
- job security
- strict requirements to protect shareholders
disadv
- complex start
- certain info must legally be published
- AGM = necessary
- failure = large scale unemployment
- shareholders = little/no input
11
Q
adv vs disadv of a state owned company
A
adv
- limited liability
- legal personality
- continuity
- members share priorities to achieve common goals
- better production bc members work for themselves
- dec made = fair and democratic
disadv
- no high salaries
- success dep. on loyalty of members
- difficult to get loans bc profit isnt main priority
- decision making = time consuming
- auditing of financial statements is compulsory
