Types of Business Ownerships

Question 1

What are some reasons why people start businesses?

Answer 1

Income Rental
To satisfy a demand
To create employment

Question 2

List some types of business ownerships?

Answer 2

1. The sole trader
   2.Partnership
   3.Companies
   4.Unlimited Liability Companies
   5.Limited liability Companies

Question 3

What is a sole trader?

Answer 3

The sole trader is a single business owner, who has to make all the decisions for the company.

Question 4

What is a Partnership?

Answer 4

A partnership business is formed legally by a minimum of two and a maximum of twenty persons in a business.

Question 5

Companies?

Answer 5

A company is a separate legal entity from its owners, known as shareholders.

Question 6

What are Unlimited liability Companies?

Answer 6

An unlimited company is one where the owners’ or investors’ liabilities are not limited to their contributions, meaning they could face unlimited losses.

Question 7

What are limited liability companies?

Answer 7

This is a company where shareholders are protected whereas they cannot take the fault for personal assets.

Question 8

Two types of liability companies?

Answer 8

Public Limited Company
Private limited Company

Question 9

What is Private limited Compaines?

Answer 9

Only allows friends, relatives and coworkers to purchase shares of the comapny and become a part of the company.

Question 10

What is Public limited Companies?

Answer 10

Public liability companies allow the public to buy shares, requiring a minimum of 7 members with no limit on the number of shareholders.

Question 11

Who is a shareholder?

Answer 11

A shareholder is someone who owns shares in a company, giving them a stake in its assets and profits.

Question 12

Source of Capital for a Sale Trader?

Answer 12

1.Loan & Overdraft from banks
2. Trade Credit
3.Personal Saving
4.Grants & loans from the government

Question 13

List some source capital for partnership?

Answer 13

1. Personal Saving
   2.Small Business loan
   3.Additional Partners

Question 14

List some source of capital for a company?

Answer 14

1.Finanical Institution
2.Government Agencies
3.Venture Capital Investors
4. Shares /Equity funding
5. Franchising

Question 15

List some of the roles of financial institution as a source of capital?

Answer 15

*Increasing the goodwill of the borrowing business in the capital market, thereby allowing the business to easily raise funds from other sources.
*Making funds quickly available even during periods of low performance

Question 16

What is a financial institution?

Answer 16

It is an establishment that conducts financial transactions such as investment, loans and deposits.

Question 17

What are some things you need as a sole trader?

Answer 17

*A completed BN1 form
*TRN
*3 passport-size photographs signed by a justice of the peace (JP)
* The registration cost is $2000

Question 18

To register as a partnership you must submit?

Answer 18

*A completed BN2 form
*Proof of Residental address and TRN
*3 passport-size photographs signed by a justice of the peace (JP)
*The National ID card for each partner
* The registration cost is $2000

Question 19

To register as a company you must submit?

Answer 19

*registration fee $12000

Question 20

What are some advantages of sole trader?

Answer 20

*Benefits of operating alone are
*all profits are taken by the owner.

Question 21

What are some disadvantages of sole trader?

Answer 21

*The sole proprietor must work for long
hours resulting in little time for family.
*There is also limited capital to inject into
the business and he alone bears all the risk
of the business.

Question 22

What are some advantages of partnership?

Answer 22

*Since more than one person is involved more capital can be raised to inject into the business.
*There is more expertise and work load is shared.
*The risk of the business operation is also shared.
*

Question 23

What are some disadvantages of partnership?

Answer 23

*All partners will be affected by the action of each partner since each person represents the business.
*Decision making may be very slow if
partners are not in agreement.
*There are high risks for partners who do not have limited liability.

Question 24

What are some advantages of company?

Answer 24

*It is a separate legal entity from the owners
*You can own property in the name of the company; there is usually limited liability for the shareholders (unless they have given a personal guarantee)
*You may be able to take advantage of tax minimization schemes (legal ones, of course!);
*It can be owned and operated by only one shareholder and director;
*It may make it easier to attract capital investment because of shareholders’ limited liability.

Question 25

What are some disadvantages of a company?

Answer 25

*They can be complicated and expensive to establish and administer if it is a large company.
*If you are not a sole shareholder, the shares may be difficult to sell.
*If you have only a minority shareholding you may be allowed little or no input into the affairs of the company;
*etc