Understanding Buisness Types Of Buisness Org Flashcards
What is a sole trader
Any firm ran owned or controlled by one individual, often a hairdressers, barbers, newsagent
What is a partnership
Any firm owned or controlled by between 2 or 20 partners, eg popular with the professions such as Lawyers, Dentists, Opticians
What is a Ltd private limited company
A firm that sells shares in the business and only to friends and family.
Local government
A local organisation that is ran by and funded by the government, eg Local Leisure Centre, Waste & Recycling
What is a social enterprise
A social enterprise is a business that trades for a social and/or environmental purpose. It will bring in most or all of its income through selling goods or services. It reinvests most of their profits to further the ‘social mission’. Eg Social Bite
Who is a sole trader owned by controld and financed by
Sole trader sole trader owners savings
Who owns controls and finances a partnership
Partners partners in charge if specific area partners capital
Who owns controls and finances a Ltd
Shareholders direct manager in charge of specific area shares capital friends and family
Who owns controls and finances a plc
Shareholders bore of directors share capital and stock market
Who owns controls and finances a charity
Board of trustees manager of shop donations
Who owns controls and finances a publicly funded org
Government officers Government minister (central govt) or local councillors (local govt) tax revenue
Advantages and disadvantage of sole trader
Pros
Decisions are made easily as no permission is needed from a boss
• Owner makes all the decisions
• Owner takes all the profits
• Firm is easy to set up
Cons
• Stressful – got to make all the decisions
• Difficult to arrange time off ie holidays
• *UNLIMITED LIABILITY
• Limited sources of finance which limits expansion
Pros and cons of partnership
Pros
• More capital is available
• Workload is shared
• Greater pool of ideas/skills
• Partners can specialise in an area and so quality of work improves
Cons
• Possible clash of personalities
• Each partner has *UNLIMITED LIABILITY
• Profits have to be shared
• Deed of partnership has to be drawn up which can cost in legal fees
Pros and cons of Ltd private limited company
Pros
• Has a separate legal identity
• Raise more capital than a sole trader/partnership
• Shareholders have limited liability
• They send their annual accounts to Registrar of Companies but is NOT in the public domain
Cons
Consent of other shareholders needed before shares can be sold
• Expansion is limited to the funds of friends and family
• Have to pay auditors to look at the firm’s books
Pros and cons of plc public limited company
Pros
• Shares are quoted on the Stock Exchange
• Business is run by a Board of Directors
• Raise large sums of money
Cons
• Shareholders can freely sell their shares
• Firm may be subject to a take-over
• Shares can fall in value
• Annual Accounts must be published – involves a cost
