U1, AOS 1: KK6 - Business Structures Flashcards
What is a small business?
The Australian Bureau of Statisitics defines a small business as a business employing fewer than 20 people. Small businesses can be further broken down to include the following classifications:
* Non-employing businesses (sole proprietorships and partnerships without
employees)
* Micro-businesses (employing between 1 and 4 people)
* Other small businesses (employing between 5 and 19 employees).
What are the 4 different types of business entities?
Sole traders
Partnerships
Private Limited Companies
Public Listed Companies
What are the to types of limited companies
Private Limited Company
Public Listed Company
Private limited companies are notated by
Pty Ltd
Public limited companies are notated by
LTD
Features of a soletrader
- One business owner who take total responsibility for the failure or success of their business.
- Unlimited liability
- Owner funds the business themselves
- Owner keeps all the profit
Examples of sole traders
Tradies
Taxi drivers
Sports coaches
Barristers
Hairdresers
Is there a limit on liabilities for sole traders
No - they have unlimited liability.
What is a partnership?
A business owned by between 2-20 people.
In partnerships do all partners take an equal part in running the business?
No - not partners will have the same level of equity.
Do partnerships have limited liability?
No. They have unlimited liability.
Examples of partnerships
Accounting firms
Law firms
Medical practices
What does it mean to say that a limited company has its own legal identity?
it is regarded as separate to the people that own and manage the companyit has its own distinct name, in which it can enter into contracts and be sued.
How can a limited liability company be formed?
Register the business as a company with the ASIC.
