U3 AOS1 CH1A Business Types

Question 1

Sole Trader

Answer 1

Owned by one person
* PROS: simple setup, full control, low cost structure, few reporting requirements
* CONS: personal unlimited liability

Question 2

Partnership

Answer 2

Owned by 2-20 individuals
* PROS: Simple and inexpensive set-up, shared control, shared responsibility
* CONS: Sharing of profits, Requires separate TFN, personal unlimited liability, risk of misused funds, potential for conflict

(partnership act 1958)

Question 3

Private Limited Company
PTY LTD

Answer 3

• Ownership divided into shares, not traded on stock exchange
  
  • PROS: Limited liability
  • CONS: complex start-up and running, Required to understand and comply with Corporations Act 2001, annual tax lodge with ATU
  • OTHER: Limited to 50 shareholders, Business Operations controlled by Directors, Money earnt belongs to company

Incorporated Business (separate legal entity)**

Question 4

CONTEMPORARY CASE STUDY (2022-2026)
PTY LTD

Answer 4

• VISY (Pratt Industries)
  ○ Private Limited Company (est 1948 Melb)
  ○ Paper, package and recycling company (social need)
  ○ Expanding into Asian Packaging Market
  □ Visy as Key player in Asian Food Security
  ○ Founder: Richard Pratt (Died April 2009)
  ○ 180+ facilities, employs 9500+ people in Aus and US, Total Sales $5 Billion +

Question 5

Public Listed Company
LTD

Answer 5

• Owned by shareholders
  
  • Listed on stock exchange
  • Directors Run company
  • PROS: limited liability (ltd.), company life exceeds directors, more capital
  • CONS: complex and expensive setup, annual financial reports, obligated to corporations act 2001, annual tax return lodged with ATO
    Money earned belongs to ‘the company’ and distributed to shareholders

Incorporated Business (separate legal identity)

Question 6

CONTEMPORARY CASE STUDY (2022-2026)
LTD

Answer 6

• QANTAS (est. November 1920)
  ○ Largest Airline in Australia, Third oldest in world
  ○ Nicknamed “The Flying Kangaroo”
  ○ Member of Oneworld airline alliance (for shared costs)
  § American Airlines, British Airways, Canadian Airlines, Cathay Pacific
  ○ CEO: Alan Joyce (acts on behalf of shareholders)
  ○ Qantas was once nationalised, then privatised
  § Nationalised: business to state govt control
  § Privatised: state to private ownership/control (shareholders)

Question 7

Social Enterprise

Answer 7

Profit making business with social objectives
* Profits reinvested for social objective
○ Revenue from membership, sponsorship, sales of products or service and government contract award income
* Example: Thank You
* Not a charity or foundation
* At least 50% profits towards social/environmental cause
* AIM: trades to fulfil a mission
○ Economic, social, cultural or environmental (public or community benefit)

Question 8

CONTEMPORARY CASE STUDY (2022-2024)
Social Enterprise

Answer 8

• Who Gives A Crap (social enterprise)
  ○ Toilet paper company intending to donate 50% of profits to charity
  § Building of toilets and sanitation in developing countries
  ○ 100 staff globally, ships to 36 countries
  ○ Growth through social media and word of mouth
  § Coronavirus panic buying sent sales soaring
  § 40x higher by day 4
  □ Who Gives A Crap sold out globally
  § Waitlist 500,000+ people
  ○ 2022: Total $10.8 million+ in donations