Ownership Structures Flashcards
What is a sole trader?
Where one owner controls a business, they can employ others but they have full control.
What is a partnership?
Where two or more owners lead the business and share profits.
What is a private limited company?
A company which is generally quite small and has shares only owned by people involved in the business.
What is the three letter code for a private limited company?
LTD
What is a public limited company?
An organisation which has shares available to buy on the stock market.
What is the three letter code for a public limited company?
PLC
What is a franchise?
An owner can allow others to trade under the name of a business.
What is a co-operative?
All members have an equal vote in how a business is run, profits are shared between members and community projects.
What is a social enterprise?
A social enterprise puts the improvement of the world above making profits.
What is limited liability?
If a business goes into debt, then an owner can only lose what they invested into it.
What is unlimited liability?
If a business goes into debt, the owners can have their personal possessions taken from them to repay debt.
Which businesses have limited liability?
Private limited companies, public limited companies. co-operatives and social enterprises.
Which businesses have unlimited liability?
Sole traders, franchises and companies.
What is an advantage and a disadvantage of being a sole trader?
You control everything
You are your own boss
You have unlimited liability
You have long hours
What is an advantage and a disadvantage of being a partnership?
You share knowledge and skills
You share responsibilities
You may not agree with others
You have to share profits
What is an advantage and a disadvantage of being a LTD?
Limited liability
Easier to borrow money
It is more expensive
Less money for shares
What is an advantage and a disadvantage of being a PLC?
Limited liability
You can make profit from shares
People you don’t know can buy shares
You have to repay people for shares if they sell them
What is an advantage and a disadvantage of being a co-operative?
Limited liability
More popular because you help people
Public finances
Don’t keep all profits
What is an advantage and a disadvantage of being a franchise?
A franchisee can trade under a well-known name
You can control what a franchisee does
It is a risk in trusting a franchisee
You have to do marketing for them
What is an advantage and a disadvantage of being a social enterprise?
Easier to gain attention
People want to buy from someone who helps the world
Non profit
Must meet social aims
What is a deed of partnership?
A legal document that states the rules of a partnership e.g how profit is decided. Not compulsory