Ownership Of Business Flashcards
Companies are owned by?
Shareholders
Co-operatives are owned by?
It’s Members
What are some types of business ownership?
1- Sole proprietorship
2- Partnership
3- Limited Liability & Cooperation companies
Who holds accountability in a business?
Owners are responsible, e.g Directors are accountable to Shareholders
Which business is difficult to dissolve?
Partnership
What is the benefit of sole proprietorship?
Flexibility & Direct control Making your own decision All profit goes to you after tax Minimal legal formalities needed Secrecy, your competitors won’t know your plans No need to share financial reports Low taxation, no cooperate tax Easy to dissolve
What are some disadvantages of sole proprietorship
Unlimited liability, if one couldn’t pay debts, his personal assets will be possessed unlike companies
Limited skills
Limited funds, high interest rates due to higher risk of not paying back
Taxation, if decides to go cooperative
Trouble finding professional due to unaffordable circumstance
Lack of continuity
What are two types of partnerships?
General partnership (unlimited liability) Limited partnership (limited liability)
What is the difference between General & Limited partnership?
General partners have unlimited liability and have full management control of the business.
Limited partners have little to no involvement in management, but also have liability that’s limited to their investment amount
What are some advantages of a partnership?
Flexibility of decision making
Combination of different skills & knowledge
Easy to form
No need to share financial reports but to abide by federal laws like labor, food and stuff
Higher Availability of funds
What are some disadvantages of a partnership?
Share of profit, more partners, less shares
Difficult to dissolve
Unlimited liability (danger incase of malpractice)
Difference of opinions
Which two types of business has separate legal identities & limited liabilities?
Limited companies and Cooperations
Business which are privately & restrictively held by a small number of investors is called?
Private limited company
How do private companies get funds?
They finance themselves by going public through IPO (initial public offering)
How can a public company get their funds?
Through selling of existing or new stocks
How is a company created or incorporated?
Through charter or article of incorporation
Is it true that stockholder can attend meetings and elects board of directors ?
TRUE
How many board of directors are there in a company?
2-3 in a small business
10-15 in a large corporation
Least/Max amount of partners in a partnership business?
Least 2, Maximum 20 , could be more
What are some advantages of a company?
Tax deduction, ease of operating expenses
Unlimited life, death of owner doesn’t effect its longevity cause it’s a separate entity concept
Combination of economic scale and resources
Limited liability
Able to attract financing through sharing new stocks
Ease of transferring ownership
What are some Disadvantages of a company?
Difficult to form
Double taxation, also at time when paying stockholders
Government restrictions
Have to submit financial reports
Have to be registered with SECP to sell stocks
What companies law are being used in Pakistan?
Companies Act of 2017 issued by SECP (Securities and Exchange Commission of Pakistan)
What law of partnership is being used in Pakistan
Partnership Act of 1932
Public sector are funded by whom and what do they do?
They are funded by Government and they insure the availability of basic human health, drinking water and cleaning
Are clubs and societies aim for profit and where do they get their profit from?
They do not aim for profit but there profit comes from members subscription fees
What are cooperatives and do they aim for a profit?
No they do not. They voluntarily come together to create a group who provides services to society and its members
