Powerpoint 2 - Advantages and disadvantages of different types of business organisations: Flashcards
Types of Business Organisations
What are the types of business organisations?
The types of business organisations include: Sole trader, Partnership, Cooperative, Limited company, State business.
What is a sole trader?
A sole trader is the exclusive owner of the business who has full control over how it is run.
What are the steps to set up a sole trader business?
To set up a sole trader business, you need to: plan what you want to do, register with HMRC as self-employed, submit a Self-Assessment tax return annually, and start trading.
What are the advantages of being a sole trader?
Advantages include: full control over the business, keeping all profits, private data with no public records, quick decision making, and the ability to specialise.
What are the disadvantages of being a sole trader?
Disadvantages include: responsibility for all debts, personal possessions at risk, no one to take over if ill, and difficulty in bulk buying.
What defines a partnership?
A partnership is formed when two or more people come together to run a business with the aim of making a profit.
What are the types of partnerships?
The types of partnerships include: ordinary partnership, limited partnership, and limited liability partnership (LLP).
What is an ordinary partnership?
An ordinary partnership involves two or more individuals who share equal authority and responsibility for the business’s debts.
What is a limited partnership?
A limited partnership has two levels of partners: general partners who manage the business and limited partners who invest but do not manage.
What is a limited liability partnership (LLP)?
An LLP is an incorporated entity with separate legal identity, where partners have limited liability and are taxed individually.
What are the advantages of partnerships?
Advantages include: shared responsibility, shared knowledge and skills, leadership cover, increased capital, and improved borrowing capacity.
What are the disadvantages of partnerships?
Disadvantages include: potential dissolution if a partner leaves, unlimited liability, potential for conflict, and slower decision making.
What is a cooperative?
A cooperative is a democratically run organisation owned and operated by its members for their mutual benefit.
What are the ethical values of cooperatives?
Cooperatives are based on honesty, openness, democracy, care for others, and social responsibility.
What is a limited company?
A limited company is an incorporated business with a separate legal identity from its owners and shareholders.
What are the types of limited companies?
Types of limited companies include: private limited company (LTD), public limited company (PLC), limited liability partnership (LLP), community interest company (CIC), and multinational corporation (MNC).
What are the features of a private limited company (LTD)?
Features include: privately owned, potential shareholders must be invited, liability limited to shares, and cannot be publicly traded.
What are the features of a public limited company (PLC)?
Features include: at least two directors, must have a qualified company secretary, can offer shares to the public, and must file full accounts.
What are the advantages and disadvantages of limited companies?
Advantages - Personal Liability is minimal, personal assets are protected, can gain tax efficiencies for personal and business activities, more credibility and trust with limited company status, company name is protected.
Disadvantages - Must registerer with companies house (more complex to set up), More costly to set up, accounts more complex, linked with HMRC via software, filed annually and Withdrawing more from the company is more difficult.
What is a state business?
State businesses are public sector organisations that implement government policy, such as the Environment Agency and Forestry Commission.
What are the Advantages and Disadvantages of a
