Ownership

Question 1

5 Types of ownership

Answer 1

• Sole Trader
• Partnership
• Private Limited Company
• Public Limited Company
• Not-For-Profit

Question 2

Sole Trader

Answer 2

The business is owned by one individual, and they own all the rights to it

Question 3

Pros of Sole Trader

Answer 3

• Provides flexibility while running the business
• Sole trader gets to make all decisions

Question 4

Cons of sole trader

Answer 4

• Sole trader bears all responsibilities for the debts and losses for the business
• Raising capital is the responsibility of the sole trader

Question 5

Partnership

Answer 5

A business is owned by two or more people. There are two types:
General partnership - this involves and investment from all partners and responsibility for debt is shared.
Limited Liability Partnership - LLP provides protection for each partner against debt

Question 6

Pros of partnership

Answer 6

• Business capital can be generated from each partners resources
• Greater capacity for loans

Question 7

Cons of partnership

Answer 7

• Risk of disagreement between partners is high
• Partners can be held liable for the actions of other partners

Question 8

Private Limited Company, LTD

Answer 8

An incorporated business that is privately held and controlled. Ownership is divided by shares in the company.

Question 9

Pros of private limited company

Answer 9

• Limited liability to shareholders
• Shares cannot be bought by the public, so the company is protected from loss of ownership and control

Question 10

Cons of private limited company

Answer 10

• Legal paperwork is necessary for an LTD
• They must be registered with the company registrar

Question 11

Public Limited Company, PLC

Answer 11

A PLC exists as a separate entity from its owners, and is directed by its shareholders. Their shares can be traded on public stock exchange

Question 12

Pros of PLC

Answer 12

• Owners have limited liability
• Capital can easily be generated through sale of shares.

Question 13

Cons of PLC

Answer 13

• Risk of takeover if someone buys majority of shares
• Exposed to public scrutiny and regulations

Question 14

Not-for-profit

Answer 14

Established for purposes other than profit generation (eg. charities, scouts)

Question 15

Pros of non-profit

Answer 15

• Attracts talent interested in the mission of the organisation.
• Exempt from paying income tax if they meet the right criteria.

Question 16

Cons of non-profit

Answer 16

• Raising funding for projects can be complicated
• Can face pressure from stakeholders