1.2 Business Ownership Flashcards
What is a sole trader
A sole trader is someone who sets up in business of his or her own
What is unlimited liability
Unlimited liability means that the personal possessions of the owners of a business are at risk if there are any probles. There is no limit to the amount of money the owners may to have to pay out.
What is a patnership
A partnership occurs when two or more people join together in a business enterprise to pursue profit
What is a deed of partnership
A deed of partnership is an agreement betwenn partners that sets out the rules of the partnership. Such as how profit will ne divided and how the partnership will be valied if someone wants to leave
What is a public limited company
A public limited company is one that has shares that are sold to the general public.
What are some advantages of becoming a public limited company
- a public limited company can advertkse its shares to the general public. This means it has access to a greater number of potential investors.
- Public companies attract more media coverage because they usually have more shareholders.
*Public limited companies are usually thought of as having more status than private companies (and are often bigger).
What are disadvantages of becoming a public limited company
*Although more media coverage can be good, it can also be bad. If a ple makes
a mistake or does something wrong, the media are more likely to cover the
story than if the business was a private limited company.
*A plc cannot control who buys its shares, so managers may find that a
competitor buys control of the company and takes it over
*plc is more regulated than a limited company - it has more things it must do
according to the law. For example, it must produce more detailed information
on its finances each year and send it to shareholders. This can be expensive as
well as giving information away to potential competitors and the media.
*When a private company becomes a public limited company, it brings in
more outside investors. The original owners may not agree with the views
and objectives of the new owners - they may clash when trying to agree
what the business should be doing.
What is a private limited company
- A private limited company is owned by shareholders. The shareholders of many private limited companies are family members
- cannot advertise its shares to general public.
- can include certain restrictions in kts articles of association to limit who the ahares are sold to.
