Intro to Business (a level) Flashcards
What are 3 characteristics of a sole trader?
- 1 owner
- Pays income tax
- Unlimited liability
Why might people want to work for themselves?
- Easy to set up
- Sort own hours/be own boss
- Receive all profits
What are some disadvantages of being a sole trader?
- Unlimited liability
- Long hours
- Increased responsibility
- Need initial capital for investment
What are some advantages of partnerships?
- Ideas can be shared
- Capital invested from more people
- Workload can be shared
- Continiuity
What is a deed of partnership?
A legal document which lays out the rules for running the partnership
What is a sleeping partner?
Someone who invests money into the business but takes no part in the daily running
What is a limited company?
A business that is owned by its shareholders, run by directors and has a separate legal identity from its owner
What are some advantages of a limited company?
- Limited liability
- Debt is spread
- Easier to raise finance
- Continuity
- Easier for business to borrow money
What are some disadvantages of a limited company?
- More complicated to set up
- Risk of takeover
- Loss of individual control
What is a franchise?
When you pay royalty fee to trade under the name of another business (McDonalds)
Why might a business might want to take on a franchise?
- Tried and tested
- Well known brand
- National advertising
- less risk
- Training provided
What is the public sector?
A service provided by national government or local government (NHS, schools..)
What is the private sector?
A private service provided by a private business. These businesses will usually seek to make a profit
What might be some benefits of being in the public sector?
- Gov funded
- Public aren’t charged to use service (excluding tax)
What might be some problems of being in the public sector?
- More expensive
- Larger tax payments
- Busy (NHS)
- Can’t opt out
- No competition
