Type Of Ownerships and keywords related

Question 1

Sole trader

Answer 1

An individual who owns and controls a business and may or not may employ other people
Adv- they keep all business profits after paying the taxes on them
Adv- small capital to set up
Disadvantage- he or she are responsible for any looses the business makes.
Dis- small profit

Question 2

Partnership

Answer 2

A business that is owned and run by between 2 &20 individuals
Adv- more owners means more capital
Adv- work can be shared
Dis- partners may disagree on the way of running the business
Dis- decision making can be slow

Question 3

Unlimited liability

Answer 3

The legal obligation on the owner of a business to settle( pay off) all debts of the business- personal belongings eg-house, properties savings

Question 4

Deed of partnership

Answer 4

An important document that should be completed when a partnership is started. If the partners do not sign it all liabilities and profits are shared equally.

Question 5

Sleeping partner

Answer 5

Someone who provides capital but doesn’t take part on the management of the business
Adv-limited liability

Question 6

Private limited company

Answer 6

A type of company where the shareholders are not allowed to sell shares to the general public
Adv- shareholders have limited liability
Adv-more capital can be raised
Dis- costs money and time to set up
Dis- profits are shared between more members

Question 7

Public limited company- PLC

Answer 7

A type of company where the general public can buy shares
Adv- large amounts of capital can be raised
Adv- shareholders have limited liability
Adv & dis- may have a very high profile in media, this can be also negative as it may show negative things of your business ex- pollution levels
Dis- outsiders can take control by buying shares
Dis- setting up costs can be very expensive

Question 8

Memorandum of association

Answer 8

A legal statement signed by all initial shareholders that gives info about the business

Question 9

Articles of association

Answer 9

A document where all the rules about running the business are written. It is agreed by shareholders, directors and company secretary.

Question 10

Shareholders

Answer 10

People who buy shares of the company, therefore they own that part of the business( % of shares)

Question 11

Limited liability

Answer 11

When a business owner is only liable for the original amount of money invested on the business.

Question 12

Unlimited liability

Answer 12

The legal obligation on the business owner to pay off al business debts.

Question 13

Unincorporated

Answer 13

Where there is no legal difference between owner and business

Question 14

Incorporated

Answer 14

The business has its own legal identity

Question 15

Franchise

Answer 15

A franchise is a license given to one business to another to sell goods and services using its name
Ex- McDonald’s, body shop , subway etc…

Question 16

Franchisor

Answer 16

The owner of the brand

Question 17

Franchisee

Answer 17

The entrepreneur who wishes to open a new branch of franchised chain( needs to pay to do so )

Question 18

Financial objectives

Answer 18

Objectives are goals or targets set by a business or its stakeholders which they hope achieve through the activities of the businesss.
Financial obj ex: survival, increase market share, sales obj( increasing revenue)
Non financial: social obj(environment/charities),personal satisfaction, challenges etc…

Question 19

Objectives change

Answer 19

The objectives are not always the same because of : 
Market condition( ex- oil drop prizes)
Technology(development)
Legislation( ex- environmental laws)
Internal reasons( hierarchy changes)