types of businesses Flashcards
unlimited liability. the owner is personally responsible for business debts.
sole trader
a business or person buys the right to use the name, products and services of an existing business
franchise
-unlimited liability
-owner suffers all losses
-difficult to take holidays or leave
sole trader disadvantages
unlimited liability. the partners are jointly responsible for business debts.
partnership
limited liability. members are limited to the value of their investment for business debts
cooperative
a business which has a separate legal entity from its shareholders.
company
-limited liability
-can raise lots of of money through shareholders
-unlimited life- change in shareholders doesn’t cease business
-run by board of directors not the shareholders
company advantages
liability depends on if it is set up as a sole trader, partnership or company
franchise
-simple and cheap to set up
-partners bring more money and skills
-share of losses
partnership advantages
a business owned by 1 person
sole trader
-simplest and cheapest to establish
-owner controls all decisions
-owner keeps all profit
-fewer govt reporting requirements
sole trader advantages
-expensive to set up and operate
-complex reporting requirements
company disadvantages
a business owned and operated by 2 to 20 partners
partnership
-established reputation, or service and store layout.
-advertising and marketing support
-franchisor provides training
franchise advantages
-minimum of 5 shareholders needed
-little to no profit distributed to members
-only one vote each member
-ongoing education for members
cooperative disadvantages
