Legal forms of buisness Flashcards
What is a sole trader?
A business controlled by one person
Give examples of sole trader buisness
retailers,plumbers,builders,electricians,grocers,butchers.
How can sole traders raise finance?
Using savings,bank loans,borrowing money from friends or family.
What are the advantages of being a sole trader?
Have control of the entire buisness,
Retain all profit
All data are kept private via one person
What are the disadvantages of being a sole trader?
Liability
All decisions are made by one person -would be helpful to have more opinions.
Finance - person will find it difficult to raise their own funds.
What is a partnership business?
Relationship existing between two or more members in trade business.
Give examples of partnership business?
Microsoft founded by bill gates and paul allen.
McDonald
Google Apple inc
How do partnerships raise finance?
Members contribute their own money.
Advantages of partnerships?
Capital- more members the more money
Flexibility - easiest to manage and run.
Shared responsibility
Decision making it can help each other out.
Disadvantages of partnerships?
Disagreements between members ,members will have different ideas
Agreements- all partners must agree with each other.
Each member share finical risk
Profit sharing - can lead to inconsistency where one member is being unfair with wages,etc.
What is public limited company?
company whose securities are traded on a stock exchange and can be bought and sold by anyone.
Give an example of a public limited company?
Next PLC,They open their shares and stocks for the public to see.
How can Public limited companies raise finance?
Through the sale of their securities.
What are advantages of Public limited companies?
These brands are recognized by the public,More capital- anyone can invest in their business.
Can easily obtain finance.
What are the disadvantages of public limited companies?
Loss of overall ownership.
Profits shared amongst more people.
Less control over business.
Decisions take longer to make.
