types of businesses Flashcards
sole traders
- an individual owner of a business
- legally responsible for all aspects of the business.
- It is a simple structure and gives the owner all the power in decision making.
- Has unlimited liability
partnership
- owned by between 2 to 20 people
- Have the same legal rights as the owners
- carry a business together
- Has unlimited liability
Private limited company
- Owned by TWO to FIFTY stakeholders
- not listed on the stock exchange.
- It is a favoured business structure for family businesses
- limited liability
Public listed companies
- Owned by Shareholders
- Ran by directors
- limited liability
- Shares can be purchased by the public
Social enterprise
- A business that exists primarily to fulfil a vision that benefits the community rather than shareholders.
- A business that have a vision for an outcome
- has a positive impact on the community.
- Eg thankyou water
Government business enterprise (GBE)
- Owned and operated by the government
- Aims to make profit along with carrying the government policies
- aim to increase their value and returns to shareholders (the government)
- eg Aus post
A and D of a sole trader
ADVANTAGES
- simple and inexpensive to set up
- owner has all control
- no arguments with partner
DISADVANTAGES:
- unlimited liability (responsible for own debts)
- difficult to gain finance
A and D of a partnership
ADVANTAGES
- simple and inexpensive to set up
- workload can be shared amongst others
- risk/debt is shared between partners
ADVANTAGES
- unlimited liability (responsible for own debts)
- need to share profits among partners
- potential disagreements over key agreements
A and D of a Private limited company
ADVANTAGES
- limited liability
- pay company tax rate
- capital can be raised by offering more shares to investors
DISADVANTAGES
- More complex and expensive to set up
- shares cannot be traded freely
- restricted number of shareholders
A and D of a public listed company
ADVANTAGES
- limited liability
- Easier to raise capital (money) by selling more shares to the public
- pay company tax rate
DISADVANTAGES
- complex and time consuming to set up
- possible loss of control
A and D of a social enterprise
ADVANTAGES
- Meeting at a social need can encourage community support
- Improve morale within the business
DISADVANTAGES
- Difficult to obtain finance to begin the business
- Difficult to focus on financial and social objectives
A and D of a Government business enterprise (GBE)
ADVANTAGES
- Provides healthy competition to private sectors
DISADVANTAGES
- Strategic directions can be change with changing governments
what is a business?
A business is an organisation that aims to produce goods and/or services to satisfy needs and wants of consumers
What are shareholders?
Are part-owners of a business as they purchase company shares.
