Year 9 key questions 1 Flashcards
Define limited liability.
The business and the shareholders that own it are distinct (separate) and so any debts can only only be taken from the busines and not the owners personal possessions.
Define unlimited limited liability.
There is no distinction between the business and the owner and so any debts that the business owes have to be payed off by the owner’s personal assets.the amount a business owner can lose is unlimited.
What is a sole trader?
A business structure where one person is the owner, the sole trader has no legal distinction from the business and has unlimited liability.
What are the advantages of being a sole trader?
- independence, the sole trader can make all their own decsions including their own working hours for example
- control, the sole trader has complete control over the usiness and any decsions eg product and price are theirs to make
- the sole trader keeps 100% of the profits and can decide how those profits are used.
What are the disadvantages of being a sole trader?
- stress, as you are on your own you are the one who is resp[onsible for all decsions whcih can be stressful, especialy if you are ill and there might be no-one to help
- no-one to share ideas, as such you may have skills in some areas buit not others so that can be dificult
- unlimited liability, any buysiness debts are the responisbility of the owner and there is no limit to what they can lose, which may involve personal possessions such as a house
What is a partnership?
A type of business structure of between 2 and 20 partners, often the structure for professions such as doctors, solicitors and accountants.
What are the advantages of being in a partnership?
What are the disadvantages of being in a partnership?
private limited company
A type of business structure where the owners have incorporated and benefit from limited liability.
public limited company
A type of business structure that has its shares traded publicly on the stock exchange.
What are the advantages of being a plc (public limited company)?
What are the disadvantages of being a plc (public limited company)?
What are the advantages of being a private limited company?
What are the disadvantages of being a private limited company?
What are the disadvantages of operating as a franchise?