Business structure

Question 1

What are 2 advantages of a company?

Answer 1

• More credibility in the marketplace.

- Easier to attract funds and investment (investors can become shareholders).

Question 2

What are 2 advantages of a partnership?

Answer 2

• Expertise is shared.

- Partners can share the risk and responsibility of the business.

Question 3

What are 2 advantages of a sole trader?

Answer 3

• Easy to start.

- All profits are property of the owner.

Question 4

What are 2 disadvantages of a company?

Answer 4

• Directors need to clearly understand their responsibilities.
• Control is divided or shared.

Question 5

What are 2 disadvantages of a partnership?

Answer 5

• Putting personal assets at risk.

- If a partner dies or retires the partnership is at an end.

Question 6

What are 2 disadvantages of a sole trader?

Answer 6

• Owners have unlimited liability for all business taxes and debts, putting their personal owns at risk.
• Harder to attract loans and investment.
• The business only lasts the lifetime of the sole trader.

Question 7

What is the definition of unlimited liability?

Answer 7

If the business fails, the personal assets of the owner can be used to pay business debts.

Question 8

What is the definition of limited liability?

Answer 8

If the business fails, the personal assets of the owner can not be used to pay business debts.