Types Of Businesses Flashcards
What is a sole trader
A sole proprietor is a business with one owner who sets his/her tax returns and has unlimited liability
Name two reasons why people become sole proprietors
- Flexible hours
- Make 100 percent profit
- Do what your love
- 100 percent decision decision making
- Since of achievement
Name 2 issues with bewitch a sole proprietor
- Unlimited liability
- Often harder to raise finance
- Can often pay higher tax rates than a company
- If the owner wants time off/is ill then the business suffers
What is a partnership
A business owned and ran by 2 - 100 people who do their own tax returns and has unlimited liability
Name two issues with partnerships
- Different business ideas
- Work hour arguments
- Profit debates
- Unlimited liability
Name 2 benefits with partnerships
- Partners can provide specialist skills
- Distributed work load
- Can be open annually
- Greater finance
What are the 6 sections on a deed of partnership
- Business name and address
- Partners names
- Partners roles
- Amount of money invested
- How the profits will be split
- What will happen If someone leaves
What is a private limited company (LTD)
A business owned by its shareholders who pay directors to run the company and has limited liability
Name 2 advantages with becoming an LTD
- Each shareholders enjoys limited liability
- Business remains operational even if shareholders change
- Easier to raise finance (eg - through sale of shares)
Name two disadvantages with being a LTD
- More complicated to set up legal formaties
- Loss of individual control
- Business accounts must be made public
What is a public limited company (PLC)
A business where shareholders are members of the general public when have limited liability
Name 2 disadvantages of being a PLC
- Shareholders may conflict over the business
- Greater threat of a takeover
- The share price may drop
Name 2 advantages with being a PLC
- Greater availability of finance
2. Excellent publicity
Define what a limited liability partnership is
A limited liability partnership (LLP) is a partnership in which some or all partners have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In a LLP, each partner is not responsible or liable for another partner’s misconduct or negligence
Define what a social enterprise is
A social enterprise is a business whom trades in order to benefit the society. These firms have social aims alongside aiming to make momey
