*sectors of the economy - private sector Flashcards
what are the 3 sectors of the economy?
private, public, third
what is a sole trader?
a business owned and run by one private individual - they are financed by their own personal savings (or bank loan or grant)
advantages of being a sole trader?
easy to set up, owners keep all profit, owners make all decisions
disadvantages of being a sole trader?
unlimited liability, difficult to raise finance, workload and responsibilities can’t be shared
what is unlimited liability?
The owner is personally and fully responsible for all losses and debts of the business - their personal possessions could be taken
what is a partnership?
a business owned by 2-20 partners who make all the decisions - financed by partners or grants or loans
advantages of a partnership?
more financed raised compared to sole trader, workload and responsibility is shared, more partners bring different enterprise and experience
disadvantages of a partnership?
unlimited liability, profit is split, disagreements can occur, partners are legally binding
what is a private limited company Ltd?
a business owned by 1-50 shareholders - controlled by board of shareholders - financed by share equity by shareholders
are private limited company shares available on the stock market?
no
advantages of private limited companies?
limited liability, more finance can be raised than ST or P, easier to get finance (grants/loans)
disadvantages of private limited companies?
competitors can see financial accounts, more complicated to set up, profits are shared
