options for start up and small businesses Flashcards
what is limited liability
the level of risk is limited to the amount of money that has been invested in the business or promised as an investment
incorporated
what is unlimited liability
when an entrepreneurs risk includes their own persona, assets such as their house and car
unincorporated
incorporated meaning
a business that is registered as a company so the business and the owners are separate in the eyes of the law
what does unincorporated mean
a business that is not registered as a company so the owners and the business are the same body in the eyes of the law
what is a sole trader
a type of unincorporated business that is owned by just one person
advantage of sole trader
full control
keeps all profits
simple setup
disadvantage of sole trader
unlimited liability
harder to raise finance
heavy workload on one person
what is a partnership
a business that is owned by a group of two or more people who share the financial risk, decision making and the profitd
advantages of partnership
shared responsibility
more capital
diverse skills
disadvantages of partnership
unlimited liability (except for limited partnerships)
potential for conflicts
shared profits
what is a private limited company
an incorporated business that is owned by shareholders
advantages of private limited company
limited liability- easier to raise funds by selling shares privately, more professional image
disadvantages of private limited company
higher setup costs
complex reporting requirements
decision making can be slower
what is a franchise
when one business gives another business permission to trade using its name, branding and products in return for a fee and share of its profits
what is a franchisor
an established business that gives permission to an entrepreneur to trade using its name and products
