Business Ownership

Question 0

Disadvantages of a sole trader

Answer 0

• no security
• limited in ideas and skills
• unlimited liability
• long hours
• lack of continuity

Question 1

Advantages of a sole trader

Answer 1

• keep all the profit
• make all the decisions
• hours are suitable and flexible
• full control
• easy to set up
• personal service

Question 2

Define sole trader

Answer 2

Owned, financed and controlled by one person but can employee other staff

Question 3

Define partnership

Answer 3

Owned, financed and controlled by 2-20 partners that is agreed through a contract

Question 4

Advantages of a partnership

Answer 4

• shared responsibility
• more capital
• can be limited liability
• specialisation

Question 5

Disadvantages of a partnership

Answer 5

• unlimited liability
• all partners are liable for debt
• limited access to capital
• conflict

Question 6

Aims of a sole trader

Answer 6

Survival
Break even
Providing service
Reputation

Question 7

Aims of a partnership

Answer 7

Survival
Reputation
Provide a service
Market share

Question 8

Facts about private limited companies

Answer 8

1-50 shareholders that are people you know
Separate legal identity
More complex to set up
Minimum share capital of £50000

Question 9

What documents do limited companies need?

Answer 9

Registrar of companies at companies house
Memorandum of association
Articles of association
Certificate of incorporation

Question 10

Advantages of limited companies?

Answer 10

• limited liability
• great access to capital
• continuity

Question 11

Disadvantages of limited companies?

Answer 11

• divorce between ownership and control
• diseconomies of scale
• must publish accounts
• competitors can see accounts