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meh > 2 - Business structures > Flashcards

2 - Business structures Flashcards

1
Q

3 types of ‘unincorporated business structures’

A

Sole proprietorships
Ordinary partnerships
Limited partnerships

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2
Q

Two types of sole proprietor - and difference

A

Sole practitioner - professional
Sole trader - non-professional

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3
Q

Define sole-proprietor

A

Individual carrying on some form of business activity on their own account

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4
Q

How is a sole proprietorship created?

A

Individual registers themselves as self-employed with HMRC

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5
Q

3 rules/regulations for sole proprietors to comply with

A

Filing own tax returns
Registering for VAT (at a certain point)
Register with HMRC for PAYE (if taking on employees)

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6
Q

3 ways in which sole proprietors can raise money without converting to different business structure

A

Invest own money
Obtain a loan
Seek investment from outside persons

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7
Q

How is a sole-proprietorship dissolved?

A

Informing HMRC that they are no longer self-employed, having tied up any loose ends prior to this

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8
Q

Three different types of partnership

A

Ordinary partnership
Limited partnership
Limited liability partnerships

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9
Q

Definition of partnership according to The Partnership Act 1890

A

The relation which subsists between persons carrying on a business with a common view of profit

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10
Q

Need a partnership agreement be in writing?

A

No, but is usually us in order to avoid disputes

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11
Q

Must a partnership have a partnership agreement?

A

No

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12
Q

What if there is no partnership agreement?

A

10 rules are set out by ss. 24 and 25 of PA1890 on how the partnership is to be run.

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13
Q

4 examples of rules set out in PA1890

A
  • Profit sharing
  • Taking part in management
  • Prohibition on admittance as partner
  • Prohibition on partner being expelled unless all other partners agree
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14
Q

Who is bound by agreement by one partner of partnership with third party?

A

That partner, the partnership and the other partners

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15
Q

3 main examples how can a partnership be dissolved?

A

If all the partners agree
Upon occurrence of particular event (if agreement allows)
By the court, following application from a partner

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16
Q

Key difference between limited partnerships compared to companies and LLPs

A

Limited partnerships are not incorporated and do not have a corporate personality

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17
Q

What is the composition of a limited partnership?

A

At least one general partner, and at least one limited partner
(Limited partners contribute stated amount, but general partners responsible for all debts after that)

18
Q

What can a limited partner not do in a limited partnership?

A

Get involved in the management of the firm

19
Q

What is the key difference between ordinary partnerships and LLPs?

A

The liability of the members of an LLP is limited - the LLP is a body corporate and so has a separate personality

20
Q

In the event of an LLP’s winding up, where would the amount each member is required to contribute typically found?

A

LLP’s partnership agreement

21
Q

6 factors affecting the structure of a business

A
  • Ownership (who, how many)
  • Liability
  • Regulation
  • Ability to raise money
  • Taxation
  • Purpose (profit or non-profit)
22
Q

5 types of company that can be registered

A
  • Public limited by shares
  • Private limited by shares
  • Private limited by guarantee
  • Private unlimited by with share capital
  • Private unlimited without share capital
    —
  • Public limited by guarantee is technically possible
23
Q

5 key differences between public and private companies

A
  • Private companies are prohibited from offering their securities to the public at large or on a stock exchange
  • Private companies can engage in business prior to being issued with a trading certificate
  • Private companies have no minimum capital requirement
  • Private companies need not appoint a CoSec
  • Private companies need not have two directors
24
Q

Define listed company

A

A company that has a class of securities listed on the UK’s ‘Official List’

25
Q

Define quoted company

A

A company whose share capital is:
- included on the UK’s ‘Official List’
OR
- officially listed in an EEA state
OR
- admitted to dealing on the NYSE or NASDAQ

26
Q

Define traded company

A

A company whose shares carry rights to vote at general meetings, and which are admitted to trading on a regulated market in an EEA state by or with the consent of the company

27
Q

2 of 3 conditions for micro-entity

A
  • not more than 632k turnover
  • not more than 316k balance sheet total
  • not more than 10 e’ees
28
Q

2 of 3 conditions for small company

A
  • not more than 10.2m turnover
  • not more than 5.1m balance sheet total
  • not more than 50 e’ees
29
Q

2 of 3 conditions for medium company

A
  • not more than 36m turnover
  • not more than 18m balance sheet total
  • not more than 250 e’ees
30
Q

What is classified as a large company?

A

Any company that is not a micro-entity, small or medium-sized

31
Q

How is market capitalisation calculated?

A

Share price multiplied by number of shares issued

32
Q

Why is it important to know if a company is FTSE 100, 250 0r 350?

A

Certain laws and governance policies apply only to FTSE companies

33
Q

Which 3 vehicles might a charity trade under?

A
  • Limited by guarantee
  • Community interest companies
  • Charitable incorporated orgainsations
34
Q

5 different forms of company re-registration

A
  • Private to public
  • Public to private limited
  • Private limited to private unlimited
    Private unlimited to private limited
  • Public to private unlimited
35
Q

How does a private company re-register as public?

A

Passing special resolution, delivering it and RR01 to CH, complying with certain conditions

36
Q

How does public company re-register as private limited?

A

Passing special resolution, delivering it and RR02 to CH

37
Q

4 benefits to a sole proprietorship

A
  • Simple to operate
  • Able to take on employees
  • Not required to disclose business info
  • Less regulation
38
Q

2 disadvantages of sole proprietorship

A
  • No separation of personality and liability
  • Difficult to raise finance
39
Q

If a promoter is forming a company, which 3 decisions do they have to make? in order

A
  1. Limited or unlimited liability
  2. Limited by shares or guarantee
  3. Private or public
40
Q

4 advantages to trading as a partnership

A
  • Easy to to set up and run
  • Can keep all affairs private
  • Flexible business structure
  • Shared responsibility and decision making
41
Q

4 disadvantages to trading as a partnership

A
  • Difficulties raising finance
  • No formal process for resolving disagreements
  • Default position is that partnership ends when partners leave
  • Jointly and several unlimited liability for debts
42
Q

For what reason were LLPs conceived?

A

As a vehicle for prof service providers

meh (20 decks)

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