TYPES OF BUSINESSES Flashcards

1
Q
  1. Sole Trader define
A

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

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2
Q
  1. Sole Trader

Strengths and Weaknesses

A

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
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3
Q
  1. Partnership define
A

an unincorporated business structure owned by 2-20 owners

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4
Q
  1. partnership

suitable when

A

small to medium business size

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5
Q
  1. Partnership

Strengths and Weaknesses

A

S :

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

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

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6
Q
  1. Private Limited Companies Pty Ltd define
A

incorporated business with at least 1- 50 SELECTED shareholders

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7
Q
  1. Private Limited Companies Pty Ltd

Strengths and Weaknesses

A

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 ▲
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8
Q
  1. Public Listed Companies Ltd define
A

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

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9
Q

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

A

to raise funds through sales and limited liability

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10
Q
  1. Public Listed Companies Ltd

Strengths and Weaknesses

A

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
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11
Q
  1. social enterprises define
A

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

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12
Q
  1. social enterprises

Strengths and Weaknesses

A

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
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13
Q
  1. Government business Enterprise define
A

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

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14
Q
  1. Government business Enterprise

Strengths and Weaknesses

A

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

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