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Flashcards in 1.5 entrepreneurs and leaders Deck (49)
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1

what's an unincorporated business?

- no legal distinction between owner and business

2

what liability does a unincorporated business have?

- unlimited liability

3

what's an incorporated business?

- business is a separate legal identity

4

what liability does a incorporated business have?

- limited liability

5

who owns an incorporated business?

- shareholders

6

what are advantages of operating a limited company?

- limited liability
- easier to raise finance
- stable form of structure
- may have tax advantages

7

what are disadvantages of operating as a limited company?

- greater admin costs
- public disclosure of company information
- profits shared between shareholders

8

what is a sole trader?

- one owner but can employ any number of people

9

what are legal responsibilities of a sole trader?

- pay income tax
- pay national insurance contribution
- must register for VAT after turnover reaches certain point

10

what liability does a sole trader have?
what does this mean?

- unlimited
- they can lose more money than was originally invested

11

what are advantages of operating as a sole trader?

- owner keeps all profits
- owner has complete control
- simple to set up
- can be flexible
- offer a personal service

12

what are disadvantages of operating as a sole trader?

- owner has unlimited liability
- may struggle to raise finance
- usually to small to exploit economies of scale

13

what are aspects of a partnership?

- more than one owner
- owners share responsibility and profits
- usually specialise

14

what are advantages of operating as a partnership?

- easy to set up and run
- can specialise
- more owners can raise more capital
- doesn't have to publish financial information

15

what are disadvantages of operating as a partnership?

- unlimited liability
- share the profits
- partners may disagree and fall out
- limited growth potential

16

what is a limited partnership?

- where some partners provide capital but take no part in management
- limited liability

17

what are characteristics of a limited company?

- separate legal identity
- limited liability
- capital raised through shares
- pay corporation tax

18

what is an IPO when does this occur?

- initial public offering
- when a private limited company wants to go public they 'float' shares on the stock market

19

what is a franchise?

- the ability to sell under another businesses name

20

what is franchising?

- franchisor grants a licence (franchisor) to another business (franchisee) to allow it to trade using the brand/businesses format

21

what are advantages of running a franchise?

- still your own business
- franchisee gets advice and training
- easier to raise finance
- easier to build a customer base

22

what are disadvantages of running as a franchise?

- not cheap
- restrictions on marketing activities
- risk that the franchisor will go out of business
-

23

what are advantages for a franchisor?

- growth strategy
- cream of 'above normal' profits

24

what is liability?

- the extent to which someone is liable for the debts of the business

25

what are advantages of operating as a public limited company?

- limited liability
- large amounts of money can be raised
- tend to have lower production costs
- may be able to create barriers to entry
- easier to raise finance

26

what are disadvantages of running as a public limited company?

- start up costs can be expensive
- an outsider could take over the company by buying out majority shares
- competitors can inspect companies accounts
- difficult to deal with customers at a personal level
- under lots of regulations

27

what is a shareholder?

- someone who invests capital in exchange for a part ownership in a company

28

what's a dividend?

- a share of profits allocated to shareholders

29

what's a mission?

- a quantitative statement of the businesses aims

30

what's an aim?

- a long term plan from which business objectives are divided