Business Legal Structures

Question 1

Sole Trader

Answer 1

When a business is owned by a single person

Question 2

Sole Trader Advantages

Answer 2

Have all decision making
Keep all profit
Competitors do not have access to their financial data

Question 3

Sole Trader Disadvantages

Answer 3

Unlimited Liability
Higher workload
Raising finance is harder

Question 4

Partnership

Answer 4

When a business is owned by two or more people

Question 5

Partnership Advantages

Answer 5

More money available to help business
Shared responsibility
Can bring more partners in for more expertise

Question 6

Partnership Disadvantages

Answer 6

Unlimited Liability
Partner Disagreements
Loss of control

Question 7

Private Limited Companies (Ltd)

Answer 7

Legal structure that recognises the business as a separate entity to its owner/s.

Question 8

Ltd Advantages

Answer 8

Limited Liability
Inexpensive to set up
Easier to raise finance (sell shares to family)

Question 9

Ltd Disadvantages

Answer 9

Companies Act requires the filing of accounts and returns
Max shareholder investment of £50,000

Question 10

Public Limited Companies (PLC)

Answer 10

An entity that can exchange shares on the stock market.

Question 11

PLC Advantages

Answer 11

Easier to raise finance
Trade Credit from Suppliers

Question 12

PLC Disadvantages

Answer 12

PLCs must release their financial account.
Shareholders of PLCs usually only invest in the stock market for a quick financial return.