Introduction to Business- Types of business Flashcards
What is a sole trader?
A business owned by one person.
What is a partnership?
A business owned by two or more people.
What is a limited liability partnership?
Businesses that would usually operate as traditional partnerships but individual partners are not personally responsible for business debts and liabilities beyond what they invest.
What is a private limited company (LTD)?
A company in which a number of shareholders (no more than 50) contribute funds to the company in return for shares. Shares can’t be sold on the stock exchange.
What is a public limited company (PLC)?
Shares are sold to the public on the stock market, shareholders become part owners of the business and have a voice in how it operates.
What is limited liability?
Investors cannot lose more than the amount they have paid into a business. It protects them from having to a pay a business’s debts in bankruptcy.
What is unlimited liability?
The owner is personally and fully responsible for all losses and debts of the business, can lose personal belongings.
Which factors affect the choice of legal structure for a business?
Control.
Limitation of liability.
Complexity of legal structure.
Flexibility and future needs.
Tax implications.
