Types of Businesses Flashcards
The partners are jointly responsible for business debts their personal assets may need to be sold to meet outstanding business debts
Partnership
- Expensive to set up and operate
- Complex reporting requirements
company disadvantages
Minimum of 5 shareholders
- little to no profit distributed to members
- Only one vote each member
- Ongoing education for members
Cooperative disadvantages
- simple and inexpensive to set up
- Partners bring more money and skill
- Share of losses
Partnership advantages
Shareholders are limited to the value of their shares for any business debts. No assets can be sold.
Company
A business or person buys the right to use the name, product and services of an existing business
Franchise
- Unlimited liability
- owner suffers all losses
- Difficult to take leave or holidays
Sole trader disadvantages
- Established reputation, products or service and store layout
- Advertising and marketing support
- Franchisor provides training
Franchise advantages
A business owned and operated by 2 - 20 people.
Partnership
Members are limited to the value of their investment for business debts
Cooperative
A business which has at least 5 members with shared managements and equal voting rights. it has a separate legal entity.
Cooperative
- 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
A business owned and operated by 1 person
Sole trader
A business which has a separate legal entity from its shareholders.
company
