Topic 1 Classifying bussiness Flashcards
business prelim
ways of classifying bussiness(4)
size
location
industry
legal structure
definition of legal structure
how the business is legally registered
name 4 types of legal structure(4)
sole trader
partnership
private
public
what is a sole trader
one person as the owner
what is a partnership
have multiple owners,usually between 2-20
what is a private bussiness
(Pty Ltd) Propriety Limited. Incorporation. Shares cant be bought by public.
what is a public bussines
(LTD) Limited. Incorporation. shares are traded on ASX
advantages of being a sole trader(3)
all profits
freedom of decisions
cheap to set up
disadvantages of being a sole trader(4)
unlimited liability
a lot stress & hard work
long hours
income tax
Advantage of being a partnership(1)
shared work load between partnerships
disadvantages of being a partnership(4)
both partners must agree on decisions =disputes?
profits are shared
income tax
unlimited liability
advantages of being a private company(2)
limited liability
corporate tax
disadvantages of being a private company(1)
time and cost to establish
advantages of being a public company(3)
limited liability
raise money through selling shares
listed on ASX
corporate tax
disadvantages of being a public company(1)
Prospectus+ Reporting
what is a partnership agreement
documents outlining how a partnership business is run (amount of shares each, how profit is split, how disputes are solved)
what is unlimited liability
it is when the owner and the business are seen as one entity, which means the owner is responsible for any business dealings
what is an incorporation
this means that companies have limited liability.
what is limited liability
it is when a business is seen separate from the owner
what is a prospectus
a detailed description shared out to the public to show the company is doing to advertise to potential or existing shareholders
ways to classify business industry(5)
primary industry secondary industry tertiary sector Quaternary sector Quinary sector
what is the primary industry responsible for
the collection and acquisition of natural resources
what is the secondary industry responsible for
manufacturing (raw materials + capital labour= product)
what is the tertiary sector responsible for
providing a service sub groups quaternary and quinary
what is the quaternary sector responsible for
IT, finance and information
what is the quinary sector responsible for
service traditionally performed in the home(cleaning, cooking,babysitting)
what are some Geographical location business classifications(4)
local business
national business
global business
transnational business
what is a local bussiness
a business that works in one area
what is a national business
an organisation that operates in one country
what is a global bussiness
an organisation that operates in many countries
what is a transnational corporation
a company that is registered and operates in more than one country at once
what does SME stand for
small medium enterprise
