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 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 limited