limited liability and ownership (2)

Question 1

4 advantages of sole traders

Answer 1

-quick decision making
-quick and easy to set up
-sole trader keeps all profits
-financial information kept private

Question 2

4 disadvantages of sole traders

Answer 2

-unlimited liability
-difficult to raise capital
-lots of pressure on one person
-difficult to run if owner is ill take time off

Question 3

3 advantages of partnerships

Answer 3

• more ideas and expertise available
• risk is shared
• easier to raise finance

Question 4

3 disadvantages of partnerships

Answer 4

• profits are shared
• disagreements which means slow decision making
• if a partner leaves business may no longer exists

Question 5

3 advantages of a private limited company

Answer 5

• limited liability
• can be easier to raise finance by selling shares
• the business can continue to trade even if shareholders change

Question 6

3 disadvantages of a private limited company

Answer 6

• more complex to set up that partnership of sole trader
• may be disagreements between shareholders
• business financial information is published

Question 7

advantages of a franchise

Answer 7

lower risk
support and training

Question 8

disadvantages of franchise

Answer 8

high initial fees and having to pay royalty payments
reputation may be damaged