UNIT 1: 1.2 Types of business entities Flashcards
Sole trader
a business that is exclusively owned by one person who has full control of it and is entitled to all of the profit (after tax)
Partnership
a business formed by two or more people to carry on a business together, with shared capital investment, and usually shared responsibility
Private sector
comprises businesses owned and controlled by individuals or groups of individuals
Public sector
comprises organisations accountable to and controlled by central or local government (the state) e.g. VicRoads, Aus Post, PTV
Privatization
the sale of public sector organisations to the private sector
Unlimited liability
- all owner’s assets are potentially at risk
Limited liability
if the company fails is the amount invested in the company, not the wealth of the shareholder
PRIVATE (LTD)- Private limited companies
(CANNOT BUY SHARES)
PUBLIC (PLC)- Public limited companies
(CAN BUY SHARES)
Social enterprise
a business with social and/or environmental objectives that reinvests most of its profits into benefiting society rather than maximising returns to owners.
E.g. providing age car housing
Social entrepreneur
a person who establishes an enterprise with the aim of solving social problems or achieving social change
Non-profit organisation
any organisation that has aims OTHER THAN making and distributing profit (usually governed by volunteers)
Non-governmental organisation (NGO)
a legally constituted body that functions independently of any government and has a specific humanitarian or social aim/purpose (e.g. human rights organisations, Amnesty international)
Charities
- dependent on on private contributions
- perform useful social and environmental functions
- set up to raise money and help people in need
Triple bottom line- 3 main aims of social enterprises
- economic
-social
-environmental objectives
the 3 objectives
Distinguish between mixed, free-market and command economies
Mixed- Economic resources are owned and controlled by both private and public sectors
Free-market- Economic resources are owned largely by the private sector, with very little state intervention
Command- Economic resources are owned, planned and controlled by the state
Privately held companies
A company that is privately owned and often has family or friends as the shareholders
-the shares are not sold to the wider public and are not traded on a stock exchange
Publicly held companies
A company that is publicly owned and and has many shareholders who can buy and sell their shares through a stock exchange
Types of for-profit social enterprises
- Private sector companies
- Public sector companies
- Cooperatives
Private sector company
A type of social enterprise that produces goods and services that are typically sold in markets for a price by for-profit businesses
Public sector company
A type of social enterprise that produces goods and services that are typically provided by the public sector
–> public corporation: a business enterprise owned and controlled by the state
Cooperatives
A business owned and operated by its members, who share the profits
-operates democratically
