types of buisnesses

Question 1

a business owned and operated by 1 person.

Answer 1

sole trader

Question 2

sole trader liability?

Answer 2

unlimited liability - the owner is personally responsible for business debts. Their personal assets may need to be sold to meed outstanding business debts.

Question 3

sole trader advantages?

Answer 3

simplest and cheapest to establish
owner has control over all decision.
owner keeps all profit.
fewer government reporting requirements.

Question 4

sole trader disadvantages?

Answer 4

unlimited liability.
owner suffers all losses.
difficult to take holidays or leave.

Question 5

a business owned and operated by 2 - 20 partners.

Answer 5

partenership

Question 6

partnership liability?

Answer 6

unlimited liability - the partners are jointly responsible for business debts, assets may need to be sold to meed outstanding business debts.

Question 7

partnership advantages?

Answer 7

partner bring more money and skills.
shares and losses.

Question 8

partnership disadvantages?

Answer 8

unlimited liability.
profits must be shared.
disputes between partners.
Ceases if partner dies, leaves or retires.

Question 9

a business which has a seperate legal entity from its shareholders. A public company has a minimum of 1 shareholder. A proprietary (private) company has 1-50.

Answer 9

company

Question 10

company liability?

Answer 10

Limited liability - share holders are limited to the value of their shares for any business debts. No personal assets can be sold.

Question 11

company advantages? Limited liability.
can raise lots of money through shareholders.
Unlimited life - change in share holders doesn’t cease business.
Run by board of directors not shareholder.

Answer 11

Limited liability.
can raise lots of money through shareholders.
Unlimited life - change in share holders doesn’t cease business.
Run by board of directors not shareholder.

Question 12

company disadvantages?

Answer 12

Expensive to set up and operate.
complex reporting requirements.

Question 13

A business or person buys the right to use the name, products, and services of an existing business.

Answer 13

franchise

Question 14

franchise liability?

Answer 14

depends on if the franchise is set up as a sole trader, partnership of company.

Question 15

franchise advantages?

Answer 15

Established reputation, products, or service and store layout.
advertising and marketing and support.
Franchisor provide training.

Question 16

franchise disadvantages?

Answer 16

Franchisor controls decisions and operations.
Paying ongoing fees to the franchisor .
profit must be shared with franchisor.

Question 17

A business which has at least 5 members with shared management and equal voting rights.
It is a seperate legal entity.

Answer 17

cooperative

Question 18

cooperative liability?

Answer 18

Limited liability - members are limited to the value of their investments for buiiness debts.

Question 19

cooperative advantages?

Answer 19

Inexpensive to register.
equal voting rights.
Limited liability.
No minimum age limits of members.

Question 20

Minimum of 5 share holders needed.
Little to no profit distributed to members.
only one vote each member.
Ongoing education for members.

Answer 20

cooperative