types of business structure Flashcards
A business owned and operated by one person
Sole Trader
A business owned and operated by 2-20 partners
Partnership
A business which has separate legal entity from its shareholders. A public company has a minimum of 1 shareholder.
Company
A business or person buys the right to use the name, products and services on an existing business
Franchise
A business has at least 5 members with shared management and equal voting rights. Separate legal entity.
Cooperative
Unlimited liability- owner is responsible for business debts. May need to sell personal assets to meet business debts.
Sole trader
Unlimited liability- partners jointly responsible for business debts. Personal assets may need to be sold to meet business debts.
Partnership
Limited liability- shareholders are limited to the value of their shares for any business. No personal assets can be sold.
Company
Depends if the franchise is set up as a sole trader, partnership or company
Franchise
Limited liability- members are limited to the value of their investment for business debts.
Cooperative
Advantages- simplest to establish, owner has control over own decisions, fewer government reporting requirements
Sole trader
Disadvantages- Unlimited liability, owner suffers all losses, difficult to take holidays or leave.
Sole trader
Advantages- simple and inexpensive to set up, partners bring more money and skills, share of losses
Partnership
Disadvantages- unlimited liability, profits must be shared, disputes between partners, ceases if a partner dies, leaves, retires
Partnership
Advantages- Limited liability, can raise lots of money through shareholders, change in shareholders doesn’t cease business, run by board of directors not the shareholders.
Company
