1.5.4 FORMS OF BUSINESS

Question 1

pros of sole trader

Answer 1

• Easy and
  inexpensive to set
  up
• The owner has
  complete control
  over the business
• All profits belong
  to the owner
• Simple tax
  arrangements

Question 2

cons of sole trader

Answer 2

• Unlimited liability,
  meaning the
  owner is
  personally
  responsible for
  any debts the
  business incurs
• Limited access to
  finance and
  capital
• Limited skill sets

Question 3

pro of partnerships

Answer 3

• Easy to set up and
  inexpensive
• Shared
  responsibilities
  and decision-
  making
• More skills and
  knowledge are
  available
• Increased access
  to finance and capital

Question 4

cons of partnership

Answer 4

• Unlimited liability
• Potential for
  disputes
• Profits are often
  shared equally,
  regardless of the
  contribution
• Di cult to transfer ownership

Question 5

pros of private limited company

Answer 5

• Limited liability,
• Access to greater
  finance and
  capital
• Easier to transfer
  ownership
• Can have a
  professional
  image and
  reputation

Question 6

cons of private limited company

Answer 6

• More expensive
  and time-
  consuming to set
  up
• More complex
  legal requirements
  and regulations
• Shareholders have
  little control over
  the company

Question 7

pros of public limited company

Answer 7

• access to capital
• liquidity for shareholders
• more diverse ownership structure

Question 8

cons of public limited company

Answer 8

• loss of control
• risk of hostile takeovers
• vulnerability to market fluctuations