TYPES OF BUSINESSES

Question 1

1. Sole Trader define

Answer 1

an un-incoporated business structure with only ONE owner who operates the business

Question 2

1. Sole Trader

Strengths and Weaknesses

Answer 2

S :

• ▼ cost of set up
• ▼ level of government regulation = easy to set up and run

W :

• unlimited liability = risk for personal assets eg. house
• ▲ level of responsibility for owner

Question 3

2. Partnership define

Answer 3

an unincorporated business structure owned by 2-20 owners

Question 4

2. partnership

suitable when

Answer 4

small to medium business size

Question 5

2. Partnership

Strengths and Weaknesses

Answer 5

S :

• ▼ cost of set up
• ▼ level of gov regulation (easy to set up and run)

W :
- unlimited liability = risk for personal assets eg. house

Question 6

3. Private Limited Companies Pty Ltd define

Answer 6

incorporated business with at least 1- 50 SELECTED shareholders

Question 7

3. Private Limited Companies Pty Ltd

Strengths and Weaknesses

Answer 7

S :

• incorporation means that liability is limited to business = protection of shareholders
• directors can be shareholders = ▲ expertise

W :

• profits are taxed X2; company and personal income tax
• cost of set up and level of gov reg are ▲

Question 8

4. Public Listed Companies Ltd define

Answer 8

incorporated business that can sell shares in an open market to an unlimited number of shareholders

Question 9

WHY A BUSINESS MAY WANT TO BECOME A Public Listed Companies Ltd

Answer 9

to raise funds through sales and limited liability

Question 10

4. Public Listed Companies Ltd

Strengths and Weaknesses

Answer 10

S :

• incorporation means that liability is limited to the bus = protection of stakeholders
• employees can be provided a share in the bus

W :

• profits = taxed X2 ; company and personal tax
• ▲ cost of set up and gov reg
• potential for loss of control

Question 11

5. social enterprises define

Answer 11

aims to make a profit and improve the community or the environment

Question 12

5. social enterprises

Strengths and Weaknesses

Answer 12

S :

• attracts customers due to use of profits
• can provide employment for community they’re trying to assist

W :

• relies on ‘angel’ investors ☞ people willing to investing without obtaining return
• can lack efficiencies as profit motives is not in front = potential for unnecessary expenditures

Question 13

6. Government business Enterprise define

Answer 13

a profit driven business that is owned by government but managed separated from the gov (ie. management team)

Question 14

6. Government business Enterprise

Strengths and Weaknesses

Answer 14

S :

• require to fund itself improves efficiencies
• provide services where MAX of profit would be detrimental to the public

W :
- difficult ti create competitive markets ☞ lack of comp can lead to insufficiencies within the business