intro Flashcards
sole trader // sole proprietor
commercial for profit business owned by 1 person
advantages od sole trading
- quick and easy to set up
- receives all the profits if the business succeeds
- complete control // swift decision making
- tax advantages
disadvantages of sole trader sole proprietors
- you need to use personal savings
- high workload
- same as legal entity as the business UNLIMITED LIABILITY
- usually small = no economies of scale
partnership
commercial for profit business owned by 2 or more people
advantages of partnerships
- can raise mire finance than. sole traders
- more expertise
- share the burden of workload
- can benefit from continuity (jak inny gyatt fhce jechac na wakqcje)
disadvantages of partnerships
- disagreements and conflicts
- slower decision making
- profits mjst be shared
- dupa jak jeden umrze albo zrezygnuje ni continuity
privately held companies
commercial for profit business owned by shareholders
limited liability (owners // shareholders treated as a separate entity)
features of privately held companies
- privately limited company
- cannot sell stock via stock exchange
- shareholders are separate legal entities
- they dont publish financial accounts
advantages of privately held companies
- better control as the stocks cannot be sold
- more finance can be raised
- continuity (even in the event of death)
-
disasvantages of privately held companies
- difficult to buy and sell shares
- more expensive to operate
- may become a target for a takeover by a larger company
publicly held companies
joint stock companies
limited liability companies owned by shareholders with the shares in the business being traded on the stock market
- shares are bought and sold by general public with the approval of existing owners
- initial public offering
- publish final accounts
advantages of publicly held companies
- easier to borrow miney fom banks due to lower risks for financial lenders
- limited liability
- economies of scale
- continuity
dosadvantages of publicly held companies
- lack of privacy (they must publish final accounts and such)
- difficult to set up in terms of administration (high costs and many rules they must follow)
- threat of rival company making a takeover bid
- diseconomies of scale (being too large can also cause inefficiencies)
social enterprises
social purpose organisations (SPOs) which aim to provide a solution for important social and or environmental issues
not often revenue generating
meeting social objectives
not commercial
public sector
part of the economy owner by the government and or government controlled
advantages of public sector companies
- providing a viable solution for the government to finance projects that it simply does not have enough money for
- fewer risks involved
- by being able to charge for their services they reduce the debt burden of the economy and taxpayers in particular
- secure employment opportunities and positive impact on local communities and the countries economic growth
limitations of public sector companies
- opportunity cost; the government gives up the option of financing other items of government expenditure
- expensive to operate (high set up costs and suxh)
- beaurocratix procedures and policies
ngos
an example of npos (non profit organisations) legak entities organised and operated for a collective social benefit rather than generating profit
they so however earn financial SURPLUS in order to continue operating
the surplus is reinvested back in the social enterprise and or community rather tahn distributed among shareholders
advantages of ngos and charities
- exempt of paying corporate and profits taxes
- qualify for government assistance such as grants and subsidies
- positive impact on employees and donors
disadvantages of ngos and charities
- strict guildlines they must follow (nit wll trading activities are permitted)
- depend on goodwill of the general public and donors to fund their operations
- wages and remunerations of workers are lower than in commercial for profit organizations
ngo
non profit social engerprise that operates jn the private sector of the economy
not a part of a government organisation
operated by a voluntary group to promote a social cause such as the protection of human and animal rights or gbe environment
