Understanding different business forms Flashcards
Business: pt. 1
Business forms: Define:
what are sole traders?
- self employed/sole proprietor
- skilled specialists
- no seperate business entities
Sole traders:
what are the postives and negative?
3 positives + 1 negatives
- P > easy to set up
- P > owner has complete freedom + control
- P > keeps 100% of profits
- N > become lonely + pressured
Business forms: Define:
what are partnerships?
- legally owned by 2 or more people
- skilled + professionals
Partnerships:
what are the positives + negatives?
2 negatives + 2 positives
- N > unlimited liability, shared amongst all patners
- N > potential conflicts + disagreements
- P > shared expertise + team work
- P > low start up costs
Business forms: Define
what is a private limited company?
- owned by shareholders
- unable to be offered to general public
- incoorporate business
- LTD or ltd
- local retails
Private limited company
what are the postives and negatives?
2 positives + 1 negative
- P > limited liability = owners arent personally liable for business debt
- P > more tax efficient than a sole trader/ partnership business
- N > assests + profits belong to company
Business forms: Define
what is a public limited company?
- PLC
- limited company
- approx. 5% limited company
Public limited company
what are the positives and negative?
2 positives + 2 negatives
- P > option to offer shares to public
- P > recieve investments through slaes of shares
- N > increased legal requirements/ paperwork
- N > original owners can loose control
Business forms: Define
what is franchising?
aquisition of a proven business model + use of its brand + products
franchisee = person who purchases rights
franchiser = an individual/ company that sells a franchise for the sale of goods/ operation of a service
Franchising
what are the postives and negatives?
2 positives + 1 negative
- P > gets a proven business system + training on how to use it
- P > franchisee benfits from economic of scale
- N > “ “ has to pay initial fee + ongoing royalties to franchiser
Business forms:
what is an unlimited liability?
unincoorporated
- owner is business > no legal difference
- owner has unlimited liability for business actions > including debt
- most uncoorporated businesses operate as sole traders
** Business forms:**
what is a limited liability?
incoorporated
- legal differnec between owners and business
- owners have limited liability
- most incoorporated businesses operate as private limited companies
Business forms:
what are private sectors?
- business are operated + owned by individuals + companies
- generally run “for profit”
> earn returns for businessowners - shareholders
Business forms:
what are public sectors?
- business + organistaions are owned + run on behalf of public/ Gov.
- not generally run, provides good + services
- small numbers of companies are ownes/ controlled by Gov.
- funded by central/ local Gov. - but still charge for some services
