Types of Businesses Flashcards
A business owned and operated by 2 to 20 partners
Partnership
- unlimited liability
- owner suffers all losses
difficult to take holidays or leave
Sole trader disadvantages
The owner has unlimited liability and personally responsible for business debts. Their personal assets may need to be sold.
Sole trader
- minimum of 5 shareholders needed
- little to no profit distributed to members
- only one vote each member
- ongoing education for members
cooperative disadvantages
- simplest and cheapest to establish
- owner has control over all decisions.
- Owner keeps all profit
- fewer government reporting’s
Sole trader advantages
A business owned and operated by 1 person.
Sole trader
Depends on if it is set up as a sole trader, or partnership company.
franchise
Shareholders have limited liability and are limited to the value of their shares for any business debts, no personal assets can be sold.
Company
- franchisor controls decisions and operations
- paying ongoing fees to the franchisor
- profit must be shared with franchisor
franchise disadvantages
- inexpensive to register
- equal voting rights
- limited liability
- no minimum age limit of members
cooperative advantages
- established reputation, products or service and store layout
advertising and marketing support - franchisor provides training
franchise advantages
- unlimited liability
- profits must be shared
- disputes between partners
- ceases if a partner dies or leaves or retires.
Partnerships disadvantages
A business which has a separate legal entity from its shareholders. A public company has a minimum of 1 shareholder. A proprietary (private) company has 1 - 50.
Company
- simple and inexpensive to set up
- partners bring more money and skills
- share of losses
Partnership advantages
The partners have unlimited liability and are jointly responsible for business debts. Their personal assets may need to be sold to meet business debts.
Partnership
