Business Ownership

Question 1

What is a sole trader?

Answer 1

Someone who sets up and owns the business individually

Question 2

What are the advantages of a sole trader?

Answer 2

Overrule all decisions
Take all profits
Complete control
Easy/quick to set up

Question 3

What are the disadvantages of a sole trader?

Answer 3

Unlimited liab
Harder to raise finance
Lack of ideas
No continuity

Question 4

What is a business partnership?

Answer 4

Business started and owned by more than one person, partners have unlimited liability, needs legal partnership agreement

Question 5

Advantages of a partnership?

Answer 5

More ideas/skills
Continuity
Easier to raise finance than sole trader

Question 6

Disadvantages of partnerships?

Answer 6

Unlimited liability
Disagreements

Question 7

What is a limited company?

Answer 7

A business that is legally and financially separate from its owners or shareholders

Question 8

What are the advantages of a limited company?

Answer 8

Limited liability
Easier to raise finance
Stable form of structure

Question 9

What are the disadvantages of a limited company?

Answer 9

Greater admin costs
Public disclosure of company info
Directors’ legal duties

Question 10

Differences between Private Limited (Ltd) & Public Limited Company?

Answer 10

PLC sells shares on stock market Ltd can’t
PLC can be taken over if an investor gains 51%
PLC is required to have a share capital of £50,000
PLC is required to include more detail in its annual report (Ltd is also required to do this)