Unit 1 AOS 2 KK2 Flashcards
Unincorporated
Businesses and owners are recognised together under the law.
Incorporated
Regardless of what happens to the owner, the business will continue to be operated.
Unincorporated businesses
Sole trader, partnership
Incorporated businesses
Company -> private, public
Sole trader
owned and operated by one person, allows owner to have all the decision making power
Sole trader features
Simple to set up and operate, has unlimited liability
Benefits sole trader
low cost to start up
complete control and no disputes as the individual has complete say
profits are kept solely by the individual
Weaknesses sole trader
Unlimited liability
workload higher since only one individual running the business
lack of ideas fro growth and improvement
Partnership
Business structure owned by 2 to 20 people
Partnership features
easy to set up inexpensive
requires sperate tax file number
unlimited liability
shared control with business partners
each partner responsible for superannuation arrangements
Partnership benefits
Low cost to start up
workload shared between partners less stress
more ideas for growth and improvement
pooled funds can allow more money to be put into the business.
Partnership weaknesses
unlimited liability
potential conflict between partners
Private limited company
Business owned by 50 shareholders, eg: small business like legal firm, accountants
shares are not traded on the stock exchange
PL company features
Separate legal entity
Limited liability
complex business structure to start up and run
expensive to start up
must be registered for GST
the money the business earns belongs to the company
Annual company tax return to be lodges with the ATO
Private company strength
Limited liability
perpetuity of continual existence -> cash flow to continue
extra capital by issuing more shares
Private company weaknesses
cost and expense higher due to set up since sperate legal entity
additional compliance costs
potential for disputes
Public listed company
Business that is owned by shareholders and is listed on the Australian Securities Exchange, The company listed on the stock exchange for members of the public who can trade shares in it.
Public company features
Separate legal entity
unlimited number of shareholders
limited liability
money the business earns belongs to the company
annual company tax return to be lodged with the ATO
Public company strengths
Limited liability
perpetuity of continual existence
access to public finance as they are on the ASX
Public company weaknesses
expensive to start up and run due to being a separate legal entity
Public disclosure
Social enterprise
Business that aims to make a profit with the objective of fulfilling a social need.
They exist to benefit society rather than owners, they run like a business and unlike charities they do not rely on donations as their main source of income.
Social enterprise features
Can open up new markets
Meeting social need cna have a positive affect or profit and market share
significant operating costs
can be difficult to focus on both social and financial objectives
Social enterprise strengths
new markets can be opened up
positive brand image is created
Social enterprise weaknesses
Difficult focusing on both financial and social objectives at once
Significant operating costs as they need to spend money funding the activities to fulfil a social need
Government business enterprise
commonwealth entity owned by the government that act under general business principles and aim to make a profit. is funded by the government.
Government business enterprise features
carries out gov policies while delivering community services which businesses in the private sector may be hesitant to do
can operate with some independence from government eg: australia post, nbn
GBE strengths
provides healthy competition in the private sector
access to funding from government -> sustainability for business.
GBE weakness
potential political interference cna impact how the business runs
excessive regulations can create inefficiencies
can be less accountability due to government ownership
