Types of Businesses Flashcards
-unlimited liability
-owner suffers all losses
-difficult to take leave or holidays
Sole Trader Disadvantages
A business which has a seperate legal entity from its shareholders. A public company has minimum of 1 shareholder. A propriety (private) company has 1-50 shareholders
Company
A business which has at least 5 members with shared management and equal voting rights. It is a seperate legal entity.
Cooperative
-Minimum of 5 shareholders needed
-Little to no profit distributed to members
-only one vote each member
-ongoing education for members
Cooperative Disadvantages
Limited liability- shareholders are limited to the value of their shares for any business debts. No personal assets can be sold.
Company
A business owned and operated by 2 to 20 partners
Partnership
-limited liability
-can raise lots of money through shareholders
-unlimited life: change in shareholders doesn’t cease business
-run by board of directors not shareholders
Company Advantages
A business owned and operated by 1 person
Sole Trader
-Franchisor controls decisions and operations
-paying ongoing fees to the franchisor
-profit must be shared with franchisor
Franchise Disadvantages
-simple and inexpensive to set up
-partners bring more money and skills
- share of losses
Partnership Advantages
Unlimited Liability- the owner is personally responsible for business debts. Personal assets may need to be sold to meet outstanding business debts.
Sole Trader
- simplest and cheapest to establish
-owner has control over all decisions
-owner keeps all profit
-fewer government reporting requirements
Sole Trader Advantages
Depends on if the franchise is set up as a sole trader, partnership or company.
Franchise
-unlimited liability
-profits must be shared
-disputes between partners
-ceases is a partner leaves, dies or retires
Partnership Disadvantages
-expensive to set up and operate
-complex reporting requirements
Company Disadvantages
