Business Sector + Types Of Business (Crossover With Chapter 1) Flashcards Preview

Introduction to Business > Business Sector + Types Of Business (Crossover With Chapter 1) > Flashcards

Flashcards in Business Sector + Types Of Business (Crossover With Chapter 1) Deck (14):
1

What’s a limited liability partnership

Combine features of partnerships and with legal companies

It’s a separate legal identity

LLP owners are called members not partners

These mean it’s now possible to have partnership advantages combined with limited liability (couldn’t get it before)

With the limited liability, now and do have to display their accounts at Companies House like ltds

2

What’s a private limited company

They are owned by their shareholders

They’re run by directors

Limited liability meaning they can only recover money from the existing assets of the business

Can only lose any money they invested into the business

Have to register with companies house

3

Why might a ltd want to become a plc

Shares in a ltd cannot be offered to the general public to buy
=restricted finance
=struggles to expand

Easy to raise capital through other sources of finance (banks)

Listed on the stock exchange????

4

What’s “divorce of ownership and control”

Associated with PLCs

Shareholders own the company but do not control it
Few shareholders have a direct say in the daily running of a PLC - specialist directors employed on their behalf to have effective day to day control on the shareholder’s behalf

Ownership and control is separated this way

However, a clash can take place between directors (controllers) and the shareholder wishes (owners)

5

What does incorporated mean

The business existing in its own right

6

What’s unincorporated mean

They do not exist separately from their owners (sole traders and partnerships have this)

7

What’s liquidation

When a company has to stop trading because of financial problems

8

Advantages of being an ltd

Cannot be taken over as a business but can sell out its shares to an investor

Has no minimum share capital value to do anything

Less complicated procedures of reporting to shareholders

The directors can also be shareholders (great view and passion for the business)

Limited liability

Continuity

9

What’s continuity mean?

The company doesn’t come to an end when the original owner dies as it is a separate legal identity

10

Disadvantages of being an ltd

Sells cannot be sold on the stock market and have to go through private negotiation if they are to be sold
=no advertising to the public of the shares for sale

Can be expensive to set up

More difficult to run than a sole trader/partnership

Legal responsibilities and job roles (hiring accountants and lawyers)

Accounts published at Companies House available for anyone to see
=main financial details had dot hide from competitors

11

What’s a PLC

Must have 2 shareholders

Must have 2 directors

Limited liability

Incorporated

A company able to sell its shares to the public (or atleast have the option to)

12

Advantages of being a PLC

Shares can be sold on the stock market being able to generate more capital to expand and grow as a business

Continuity

Seen as less risky by banks making it easier to borrow money

13

Disadvantages of being a PLC

Require a minimum of £50,000 share capital

Can be taken over very easily with easily bought shares available to anyone to buy
=legally able to be taken over after an investor gains 51% of the shares

Company accounts aren’t private
=at Companies House

More complicated management structures to manage more people, communication and coordination

14

What’s the public sector?

Different objectives to private sectors businesses (ST, P, LTD, PLC)

Not expected to make a profit

To provide a value-for-money service

Expectations by staff or entertainment (BBC) to provide the highest quality of service possible

Expected to keep a tight rein upon finances so they don’t waste any funds they receive very limitedly