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):

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


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 lose any money they invested into the business

-Have to register with companies house


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????


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)


What does incorporated mean

The business existing in its own right


What’s unincorporated mean

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


What’s liquidation

When a company has to stop trading because of financial problems


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



What’s continuity mean?

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


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


What’s a PLC

-Must have 2 shareholders

-Must have 2 directors

-Limited liability


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


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


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


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


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 limited