PowerPoint 4 - Financial, legal and commercial implications for each type of business structure. Flashcards
Types of Business Organisations
What are the financial implications of different business structures?
Different types of business structures can impact how a business can make or spend its money and how it manages and reports its financial position.
What are the three main ways business organisations can make money?
- Sales – trading products and services. 2. Investments – using money to make money. 3. Donations – gifted money for a specific cause.
This depends on legal status of the business
What costs must businesses cover to survive?
Businesses must at least cover their costs, which include: 1. Start up – registration, premises, equipment. 2. Running – rent, energy, stationery, administration. 3. Production – raw materials, machinery, marketing. 4. People – salaries, taxes, pensions, National Insurance.
What are the legal requirements for financial reporting?
Some businesses must follow legal requirements for financial reporting, which include understanding financial terminology, evaluating the impact of financial decisions, creating and reviewing budgets and forecasts, and analyzing financial statements.
What are the two major types of business entities?
- Unincorporated 2. Incorporated
What is an unincorporated organisation?
An unincorporated organisation does not have a separate legal personality from its owner, meaning owners are not protected from creditors and can be sued for debts owed by the business.
What are the five main forms of unincorporated organisations?
- Sole trader 2. Ordinary partnership 3. Limited partnership 4. Unincorporated association 5. Trust.
What are the seven main forms of incorporated organisations?
- Limited company (PLC or LTD) 2. Limited liability partnership (LLP) 3. Community interest company (CIC) 4. Charitable incorporated organisation 5. Community benefit society 6. Cooperative society 7. Financial mutuals.
What is a social enterprise?
A social enterprise is a business with primarily social objectives that reinvests surpluses in its purpose rather than maximizing profits for shareholders and owners.
What is the definition of a charity?
A charity is an organisation with a specific purpose, legally designated to be charitable and exclusively for a public benefit.
What are the commercial implications of sales and trading operations?
The type of business structure determines the types of entrepreneurial activities it can carry out, including sales of products, services, and marketing.
What investment activities can some business structures engage in?
Investment activities include buying stocks and shares, angel investing, foreign currency transactions, and futures buying of crop commodities.
How can businesses generate income through donations?
Traditional registered charities can only generate income through donations, while some social enterprises may collect donations for their specific cause.
What are examples of charitable fundraising activities?
Examples include sponsored events, charging an opt-in levy, and adopting a charity for a year.
