A single person who is the exclusive owner of a business.
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What is Unlimited Liability?
Where the business owner is not a separate legal entity to the business and is therefore personally liable for its debts
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What are the Advantages of Sole Traders?
- Easy to Set up
- Sole Trader gets to be their own boss
Sole trader decides what to do with profit
- Easy to Change the Legal structure
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What are the Disadvantages of Sole Traders?
- Unlimited Liability
- Hard to Raise finance
- All responsibility for making decisions is yours
- Can be hard to retain good employees
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What are Private Limited Companies?
Companies where ownership of shares is restricted. For the company to sell shares, all the current shareholders must agree to sell them
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What are the Advantages of PLCs?
- Limited Liability
- Owners retain a lot of control over how the business is managed
- Easy to get a loan
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What are the Disadvantages of PLCs?
- Finance is needed to incorporate a business
- Company is legally obliged to publish their accounts each year
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What are the Advantages of Selling Shares?
- Allows companies to raise money for investment
- Easier for companies to raise money from banks as they present less risk
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What are the Disadvantages of Selling Shares?
- Owners have little say over how the business is run
- Anyone can take over the company if they are able to buy enough shares
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What is a Not-for-Profit Organisation?
A business where any profit is reinvested in the business. Profit cannot be kept by the owners
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What is a Charity?
A Not-for-Profit business type where all profits are given to battle ethical issues
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What is a Social Enterprise?
A Not-for-Profit business type where profit is reinvested to support the social enterprises aim
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What is an Unincorporated Association?
A Not-for-Profit business type where the owners have unlimited liability
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What is Franchising?
Where a business gives someone the right to sell its products and use its trademarks
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What are the Advantages of Franchising?
- The business can expands without needing large amounts of investment
- The business does not have to be concerned about some of the risks of becoming a larger corporation
- Franchising increases brand awareness
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What are the Disadvantages of Franchising?
- Franchiser does not have complete control over how they operate
- If a franchise is run badly, then a single franchise or store can negatively affect the brand image
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Other cards in this set
Card 2
Front
What is Unlimited Liability?
Back
Where the business owner is not a separate legal entity to the business and is therefore personally liable for its debts
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