Types of business organisations

Question 1

Sole trader

Answer 1

Is a business owned by one person.

Question 2

Limited liability

Answer 2

Means that the liability of shareholders in a company is limited to only the amount they invested.

Question 3

Unlimited liability

Answer 3

Means that the owners of a business can be held responsible for the debts of the business they own. Their liability is not limited to the investment they made in the business.

Question 4

Partnership

Answer 4

Is a form of business in which two or more people agree to jointly own a business.

Question 5

A partnership agreement

Answer 5

Is the written and legal agreement between business partners. It is not essential for partners to have such an agreement but it is always recommended.

Question 6

An unincorporated business

Answer 6

Is one that does not have separate legal identity.

Question 7

What type of businesses are unincorporated?

Answer 7

Sole traders and partnerships.

Question 8

Incorporated business

Answer 8

Are companies that have separate legal status form their owners.

Question 9

Shareholders

Answer 9

Are the owners of a limited company. They buy shares which represent part ownership of the company.

Question 10

Private limited companies

Answer 10

Are businesses owned by shareholders but they cannot sell shares to the public.

Question 11

Public limited companies

Answer 11

Are businesses owned by shareholders but they can sell shares to the public and their shares are tradable on the stock exchange.

Question 12

A Annual General Meeting (AGM)

Answer 12

Is a legal requirement for all companies. Shareholders may attend and vote on who they want to be on the board of directors for the coming year.

Question 13

Dividends

Answer 13

Are payments made to shareholders from the profits (after tax) of a company. They are the return to shareholders for investing in the company.

Question 14

A franchise

Answer 14

Is a business based upon the use of the brand names, promotional logos and trading methods of an existing successful business. The franchisee buys the license to operate this business from the franchisor.

Question 15

A joint venture

Answer 15

Is where two or more businesses start a new project together, sharing capital, risks and profits.

Question 16

A public corporation

Answer 16

Is a business in the public sector that is owned and controlled by the state (government),