Unit 1 - 1.3 - Business Ownership Flashcards
What happens when a business becomes incorporated?
It becomes a separate and distinct legal entity independent of the business owners.
Are sole traders and partnerships incorporated?
Yes sole dtraders and partnerships are not incorporated.
What types of companies are incorporated?
Private limited companies and public limited companies are incorporated.
What is a key characteristic of incorporated businesses?
They have limited liability.
Fill in the blank: Sole traders and partnerships are _______.
not incorporated.
True or False: Incorporated businesses have unlimited liability.
False.
What does limited liability mean?
Owners are not personally liable for the debts of the business.
What is a partnership?
A business owned by between 2 and 20 partners.
What is a sole trader?
A business owned by one person.
What is a feature of a sole trader?
Easy to set up.
Who makes all the decisions in a sole trader business?
The owner makes all the decisions.
What happens to a sole trader business when the owner dies?
The business stops when the owner dies.
Is business information public for a sole trader?
No information about profits must be published.
What is a limitation of raising finance as a sole trader?
This is limited because there is only one person to invest savings and banks may think they are risky to lend to.
What is a feature of a partnership?
Only needs a deed of partnership (a written agreement between partners).
How are decisions made in a partnership?
The partners (usually) make decisions between themselves.
What is a potential issue in decision-making for a partnership?
It is possible that the partners may disagree which would lead to problems making decisions.
How are profits handled in a partnership?
The profits will have to be shared between all the owners.
What happens to the deed of partnership when an owner leaves or joins?
A new deed of partnership will be needed when an owner leaves or joins.
Is business information public for a partnership?
No information about profits must be published.
What is a limitation of raising finance in a partnership?
Usually there are only a few partners to invest in the partnership and banks may think they are risky to lend to.
What is a feature of a private limited company?
Shareholders can restrict who can buy shares.
What happens to a private limited company if shareholders sell their shares or die?
The business continues even if shareholders sell their shares or die.
Is business information public for a private limited company?
The public can see information about the business.