Unit 1.2 - Business ownership Flashcards
Define sole trader
Single owner of a business
Sole trader benefits (3)
Easy and cheap to set up
Own boss
Keep all profit
Sole trader costs (3)
Long hours
Unlimited liability
Difficult to raise finance
Define unlimited liability
No difference between the owner and the business, it is unincorporated meaning that they can get sued personally and lose their personal possessions to pay off any debts
Define partnerships
Two or more owners of a business
Partnership benefits (4)
More ideas - specialisation - more skills
Share the work
More capital
Silent partner
Partnership costs (4)
Unlimited liability
Profits are shared
Responsible for what the other partners do
Decision making is slower - disagreements
Define private limited company (Ltd)
An ownership structure that sells shares to friends and family
Private limited company (Ltd) benefits (4)
Limited liability
Continuity
Easier to access additional finance
Keep control as shareholders have to agree to sell shares
Private limited company (Ltd) costs (2)
Expensive to set up
Publish accounts
Define public limited company (PLC)
An ownership structure that sells shares on the stock market
Public limited company (PLC) benefits (3)
Raise significant capital - through share issue
Expand and diversify
Limited liability
Public limited company (PLC) costs (4)
Can be taken over
Publish everything
Large share of profits - dividends
Shareholders may have little say/power
Define dividends
Money paid to shareholders from the companies profits
Define not for profit business
A business that is set up to help and support not with the intention of making profit, requires profit to survive though
