N5S3 - Types of Organisations Flashcards
State the three types of organisations WITHIN the Private Sector
- sole trader
- partnership
- private limited company (ltd)
Describe the features of a sole trader organisation
A sole trader organisation is
* Owned by a private individual
* Controlled by a private individual
* Financed by the owners personal assets or loans from family/friends
* The owner has unlimited liability
Describe the features of a partnership organisation
A partnership organisation is:
- Owned by 2-20 partners
- Controlled by Partners
- Financed by inviting more partners who invest savings
- The partners have unlimited liability
Describe the features of an Ltd organisation
A private limited company (ltd) is:
- Owned by at least one private (invited) shareholder
- Controlled by a Board of Directors
- Financed by selling shares to family or friends
- The shareholders have limited liability
State the two types of organisations WITHIN the Public Sector
- National Government
- Local Government
State the two types of organisations WITHIN the Third Sector
- Charities and Community groups
- Social Enterprises
Describe the features of a social enterprise
A social enterprise is:
* Owned by a social entrepreneur
* Controlled by the entrepreneur
* Financed by retained profits, donations, fundraising
* The social entrepreneur has unlimited liability
Describe the features of a charity
A charity is:
* Owned by trustees
* Controlled by a board of elected trustees
* Financed by donations, government grants, fundraising
* The trustees have limited liability
Define a charity
A charity is an organisation that is set up for a specific social cause
Define the term “limited liability”
It means that shareholders are only responsible for the money they invested
Define a community group
A community group exists to provide a service for people. They are non-profit.
Define the term “unlimited liability”
It means the owner is responsible for all business debts
Discuss two advantages and disadvantages of operating as a sole trader
ADVANTAGES
* You get to keep all profits to yourself
* Easy to set up- little legal paperwork required
DISADVANTAGES
* Massive workload
* Unlimited liability - business owner is responsible for all debts
Discuss two advantages and disadvantages of operating as a partnership
ADVANTAGES
* Different partners can supply different skills
* Workload is shared
DISADVANTAGES
* Profit is shared between the partners
* Disagreements and arguments can transpire
Discuss two advantages and disadvantages of operating as an ltd
ADVANTAGES
* Limited liability - shareholders are only responsible for what they have invested
* Owners can retain control
DISADVANTAGES
* Shares cannot be sold publicly
* Legal requirement to publish annual financial statement
