U3 AOS1 CHPA FELIX's

Question 1

What is a business

Answer 1

-Business(n.)= lawful, commercial activities to earn profit.

Question 2

What is a sole trader?
What are the distinguishing features of a sole trader?

Answer 2

-Sole trader(n.)=A self-employed person who owns their business as an individual

Question 3

What are the benefits and disadvantages of being a sole trader?

Answer 3

• PROS: simple setup, full control, low cost structure, few reporting requirements
  CONS: personal unlimited liability

Question 4

What is a Partnerships?
What are the distinguishing features of a Partnerships?

Answer 4

-Partnership(n.)=A group of 2-20 people who own a business together.

Question 5

What are the benefits and disadvantages of being a Partnerships?

Answer 5

• PROS:
  -Simple and inexpensive set-up(e.g. reduced amount of paper work)
  -shared control + shared responsibility
  -increased capital from multiple owners
• CONS:
  -Sharing of profits
  -Requires separate TFN
  -personal unlimited liability
  -risk of misused funds
  -potential for conflict

Question 6

What is a Private limited company?
What are the distinguishing features of a Private limited company?

Answer 6

-Private limited company(n.)=An incorporated business that is owned by sharesholders and not listed on the stock exchange.

Question 7

What are the benefits and disadvantages of being a Private limited company?

Answer 7

• PROS: Limited liability, Board of directors are able to choose who its shareholders are.
• CONS: complex start-up and running, Required to understand and comply with Corporations Act 2001, annual tax lodge with ATO
• OTHER: Limited to 50 shareholders, Business Operations controlled by Directors, Money earnt belongs to company
  Money earned belongs to ‘the company’ and distributed to shareholders

Question 8

What is a Public listed company?
What are the distinguishing features of a Public listed company?

Answer 8

-Public listed Company(n.)=An incorporated business that is owned by shareholders, run by directors, and listed on the stock exchange(such as the ASX).

Question 9

What are the benefits and disadvantages of being a Public listed company?

Answer 9

• 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

OTHER: have to annually meet with its shareholders=normally at a general meeting(AGM). Manager and directors who are running the business on the owner’s behalf report back to the owners about how the business is going.

Question 10

What is a Social enterprise?
What are the distinguishing features of a Social enterprise?

Answer 10

-Social enterprise(n.)=A profit-making business with social objectives, whose surpluses are reinvested towards that social objective.

Question 11

What are the benefits and disadvantages of being a Social enterprise?

Answer 11

Pros=Making a social impact, chances of receiving grants, employment opportunities, Tax deductions, Benefiting communities

CONS=Limit on revenue generation, competition with corporates, Strict rules and regulations, constant monitoring

Question 12

What is a Government business enterprise?
What are the distinguishing features of a Government business enterprise?

Answer 12

-Government business enterprise(n.)=A business that is owned by the government, but aims to act under general business principles and make a profit.

Question 13

What are the benefits and disadvantages of being a Government business enterprise?

Answer 13

PROS=direct subsidies, regulatory advantages and favourable taxation or borrowing arrangements.

CONS=various forms of inefficiency, including bureaucratic constraints and pricing controls. GBEs restrict the firing and hiring of employees.

Question 14

What is unlimited liability and what is limited liability

Answer 14

-Unlimited liability(n.)=The business owner/s are personally liable to the debts of the company

-Limited liability(n.)=Having its own legal identity, the owners will not be personally liable for the debts of the company.

Question 15

What is an incorporated business and what is an unincorporated business

Answer 15

-Incorporated(adj)=Business has its own legal identity and can sue or own assets in its own right.

Unincorporated(adj)=Business and owners are considered the same legal entity

Question 16

What is nationalising a business

Answer 16

-Nationalise(v.)=To transfer(a business) from private to state ownership or control.

Question 17

What is privatising a business

Answer 17

-Privatise(v.)=To transfer (a business) from state to private ownership or control.