KKK 1 Flashcards
Sole trader
A business that’s owned and operated by one person. Other people may work for the business but the sole proprietor provides finances and is the one that makes the decisions.
Triple bottom line
The 3 (triple) other areas include
social, economic and environmental
objectives.
our economy is divided into two sectors…
private and public
What does public include?
Government department e.g. Australian taxation office and Government business enterprises e.g. Australian Post
Business definition
A type of organisation that’s involved in the provision of goods and/ or services.
Sole trader +
Inexpensive to set up
Business can be sold without consent from partners
The owner can keep all the profits to themselves
Sole trader -
unlimited liability (personal assets at risk)
Longer hours due to relying heavily on sole owner
Capacity to raise capital may be difficult
partnership definition
A business that is owned by 2 and 20 people, having the same legal entity to the owners and therefore has unlimited liability.
partnership +
Workload is shared among partners
If a person leaves the business the business still operates
Easier to raise more capital compared to a sole trader
Partnership -
unlimited liability (personal assets at risk)
All partners are liable for the actions of each individual partner
Profits are shared among partners
The private sector definition
businesses that are owned and operated for the goal of profit.
Includes:
Sole trader e.g. barber shop
Partnership
Private and Public companies
VERY SMALL/MICRO
Fewer than 5 employees
SMALL
Fewer than 20 employees, Non- manufacturing industry
Fewer than 100 employees - Manufacturing industry
MEDIUM
Between 20-199 employees
LARGE
200 & above employees
Social enterprise
A business that exists primarily to fulfil vision that benefits the public or community rather than shareholders. Like other businesses, they sell goods and/or services, however they primarily trade to have a positive impact on the community.
Social enterprise +
Enables the business to attract government funding or community donations
Having a primary aim to benefit a social cause may attract customers to purchase goods/services from business
Social enterprise -
May be difficult to attract investors due to the lack of profits distributed to owners
May be difficult to use funds to grow the business due to money being used on the social cause
private company
An incorporated business that is owned by between 1 - 50 shareholders. Shares are sold privately and are not open to be traded in the public. e.g. Wesfarmers
private company +
- Limited liability - seperate legal entity
- Pay company tax rate rather than income tax rate on profits
- May be easier to raise capital by offering shares to investors
Private company -
More expensive to set up
More reporting requirements to shareholders and ASIC
Restricted number of shareholders
Public company definition
An incorporated business that’s owned by a minimum of 1 public with no limit of shareholders e.g. Linfox and is listed on a public exchange e.g. ASX
Public company +
Limited liability - seperate legal entity
Pay company tax rather than income tax rate on profits
Greater ability to raise large amounts of capital through share offers
Public company -
Complex and expensive to establish
Loss of control over who owns shares in the company
Financial performance is open to scrutiny
Businesses can be differentiated on the basis of…
- Size e.g. No. of employees
- Nature of operations e.g. produce,
- Form of legal ownership e.g. sole trader
- Extent on market share
- Organisation’s contribution to the economy e.g. GDP
Types of businesses industries
- Primary e.g. mining
- Secondary e.g. Manufacturing
- Tertiary e.g. retail
Tertiary a: Quaternary e.g. Information processing
Tertiary b: Quinary e.g. Hospitality
Government business department
Funded by the government, provide service and not expected to make a profit.
Government business enterprise
It’s a self funded service and its goal is to make a profit.
