Types of Businesses Flashcards
A business owned and operated by 1 person
Sole trader
unlimited liability- the owner is personally reasonably for business debts. their personal assets may need to be sold to meet outstanding business debts.
sole Trader
simplest and cheapest to establish. Owners has control over all decision. Owners keeps all profit fewer government reporting requirement.
Sole trader advantages
Unlimited liability owner suffers all losses difficult to take holidays or leave.
Sole trader disadvantage
A Business owned and operated by 2 to 20 partners
Partnership
Unlimited liability- the partners are jointly reasonably for business debts. their personal assets may need to be sold to meet outstanding business debts.
Partnership
Simple and inexpensive to set up. Partners bring more money and skills share of losses
partnership advantages
Unlimited liability profits must be shared disputes between partners ceases if a partner die leaves or retires.
partnership disadvantage
A business which las a separate legal entity from its shareholder. A public company has a minimum of 1 shareholder. A proprietary (private) company has 1-50
Company
limited liability shareholders mare limited to the value of their shares for any business debts. No personal assets can be sold
Company
Limited liability can raise lots of money through shareholders unlimited life- change in shareholders doesn’t cease business run by board of directors not the shareholder.
Company advantages
expensive to set up and operate complex reporting requirements
Company disadvantage
A business or person (Franchisee) buys the right to use the name products and services of an existing business (Franchisor)
Franchise
Depends on if the franchise is set up as a sole trader partnership or company.
Franchise
Established reputation products or service and store layout. Advertising and marketing support. Franchisor provides training.
Franchise advantages
