types of businesses (ch1)

Question 1

sole trader

Answer 1

an individual that owns and operates the business themselves

A:

1. simple and cheap to start up
2. owner has complete control over business
3. minimal government regulation

DA:

1. unlimited liabilty (all responsibility lies on individual)
2. individual has to rely on own knowledge to run business
3. harder to get finance for business

Question 2

partnership

Answer 2

when two or more (2-20) people own the business and work together to operate it

A:

1. able to gain more knowledge due to more people
2. simple and cheap to start up
3. workload shared

DA:

1. potential for disputes
2. unlimited liability

Question 3

private limited company (pty ltd)

Answer 3

a business that is a incorporated legal entity owned by a minimum of 1-50 shareholders

A:

1. limited liability for shareholders
2. separate legal entity (only company assets can be taken, not personal assets (if the company were to be sued))

DA:

1. involves high cost to set up
2. higher degree of government control

Question 4

public listed company

Answer 4

a business that is listed on the stock exchange which allows anyone to become a shareholder

A:

1. limited liability for shareholders
2. separate legal entity

DA:

1. high establishment cost
2. highly complex structure

Question 5

social enterprise

Answer 5

a business owned by an individual/s that seeks to make a profit which is then used to fulfill a social need

A:

1. benefits community or environment
2. meeting social needs can attract customers, media

DA:

1. may struggle financially as most profit goes into fulfilling social need
2. difficulty with start up costs

Question 6

government business enterprise

Answer 6

a business owned and operated by the government that seeks to make a profit

A:

1. carries out government policies
2. financial support from governement

DA:
1. political interference