Making the business effective Flashcards
What is a sole trader?
A single person who is the exclusive owner of a business
Advantages of a sole trader
- easy to set up
- own boss
- decide what to do with profits
Disadvantages of sole trader
- unlimited liability
- hard to raise finance
- all responsibility on you
What is a partnership?
business owned by 2 or more owners
Advantages of partnerships
- more people more ideas
- easier to raise money
disadvantages of partnerships
- profit shared
- unlimited liability
- may disagree
- everyone liable for eachothers actions
what does ‘incorporated’ mean?
shareholders protected by limited liability
what is a private limited company?
companies where ownership of shares restricted
advantages of private limited companies
- limited liability
- all shareholders agree to sell shares
- easy to get loan
cons of private limited liability
- finance needed to incorporate business
- legally obliged to publish accounts each year
what is a public limited company?
sell shares on stock exchange
Pros of public limited companies
- sells shares on stock exchange which raises money for investment
- easy to raise finance
- limited liabilty
cons of public limited companies
- owners have little say
- could be taken over
- company accounts have to be public by law
what is franchising
where a company gives someone the right to sell its products and use its trademarks
cons of franchising
- business can expand without large amount of investment
- increases brand awareness
