Types of businesses

Question 1

Sole Trader

Answer 1

Individual owner of a business, which is registered under its own business name and are entitled to keep all profits.
Adv. - Simple, inexpensive, no disputes
Disadv. - Unlimited liability, finance, reliant on owner

Question 2

Partnership

Answer 2

Legal form of business ownership where 2-20 partners work together. Each partner is responsible for management, unlimited liability.
Adv. - Inexpensive, risk is shared
Disadv. - unlimited liability, no perpetuity

Question 3

Private limited company

Answer 3

Separate legal incorporated body owned by shareholders. Pty Ltd places restrictions on how it will run. Max. of 50 non-employee shareholders
Adv. - Limited liability, extra capital, perpetuity
Disadv. - complex to establish, higher costs

Question 4

Public company

Answer 4

Separate legal entity that has the hope of increasing the number of shares and access to more capital. Listed on the ASX. No limit on shareholders
Adv. - extra capital, limited liability, perpetuity
Disadv. - complex structure, establishment costs

Question 5

Social enterprise

Answer 5

Private sector that distributes profit to benefit the community rather than individual shareholders.
Adv. - gives back to community, solves problems
Disadv. - makes no profit

Question 6

Government business enterprise

Answer 6

Government run and operated business that seeks to run profitably by controlling costs and selling goods to cover the costs.