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JC Business > Chapter 18 - Forms of Business > Flashcards

Chapter 18 - Forms of Business Flashcards

1
Q

What are the 4 main types of business organisations?

A

◘ Sole Trader
◘ Private Limited Company
◘ Co-operative
◘ Semi-state Company

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2
Q

What is a sole trader?

A

A person who owns and runs their own business

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3
Q

Give an example of a sole trader

A

Dentist, corner shop, carpenter

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4
Q

How would you set up as a sole trader?

A
  1. Decide what area of business you want to go into
  2. Find a suitable premises
  3. Decorate and fit out premises
  4. Register your business name with Registrar of Business Names
  5. Apply for a licence if necessary
  6. Advertise and promote business
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5
Q

What are the advantages of a sole trader?

A

»Very easy to set up
»Owner can make decisions quickly
»After tax, all profits belong to sole trader
»Owner can decide on their own working hours

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6
Q

What are the disadvantages of a sole trader?

A

»Owner has to make all decisions by themselves
»May have a very heavy workload
»Must provide all finance to start up business
»May find it difficult to compete with larger businesses
»Unlimited liability

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7
Q

Describe unlimited liability

A

Means the sole trader is responsible for all debts of the business. They must repay the debts even if this means selling the business. If this isn’t enough, the sole trader must use their private possessions to pay of the remaining debt

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8
Q

What is a private limited company?

A

Formed when between 1 and 50 people put together money to start a new business with limited liability

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9
Q

Give an example of a private limited company

A

Solicitors, accountants

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10
Q

Who are shareholders?

A

People who put money into a new company are called shareholders because they each but a share of the new business. The more money they invest, the greater number of shares they get

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11
Q

What is the total amount of money invested by shareholders into a company called?

A

Capital of the company

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12
Q

What is limited liability?

A

If a private limited company goes bankrupt, the shareholders will only loose the amount of money they invested into the company

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13
Q

What are the advantages of a private limited company?

A 
»Limited liability
»Can get advice on making decisions
»Workload is shared
»Easier to get finance
»Easier to attracts employees
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14
Q

What are the disadvantages of a private limited company?

A

»Have to share profits
»Slow decision making
»Harder to set up than sole trader

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15
Q

What 3 important documents are required to form a private limited company?

A

▬ Form A1
▬ Memorandum of Association
▬ Articles of Association

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16
Q

What information does Form A1 contain?

A
  1. Name of business, address and company secretary
  2. Details about directors and their names, addresses and occupations
  3. Signatures of directors to show they have agreed to act as a director of the new company
  4. Signature of each director to show they will run the company properly and will obey all relevant laws → Declaration of Compliance
17
Q

What information do Articles of Association contain?

A
  1. Name of business
  2. Amount of share capital in business
  3. Voting rights attached to each share
  4. Number of directors in the company and how they should be elected
  5. How an AGM is called (or EGM)
18
Q

What information does the Memorandum of Association contain?

A
  1. Name of business
  2. Objectives of business
  3. Whether business has limited liability or not
  4. Capital of business
  5. Names of those who formed the business and the number of shares they purchased
19
Q

Certificate of Incorporation

A

Document that proves business has been registered as a private limited company

20
Q

Co-operatives

A

Organisations formed by people who join together to achieve a particular objective that they could not achieve on their own

21
Q

Producer co-op

A
  • Owned by customers
  • E.g a group of farmers join together and contribute money to set up a factory that will buy the produce of the farmers (co-op owners) and use it to pproduce food products. These products are then sold the farmers, locals, shops, wholesalers and restaurants
  • E.g Lakelands dairies, County Cavan
22
Q

Retail co-op

A
  • Group of retailers e.g small shopkeepers, join together so they can buy goods in large quantities from wholesalers
  • They get bigger discounts so can sell their goods at a lower price
  • It helps them to compete with larger supermarkets
  • E.g Londis started as a small retail co-op
23
Q

Worker co-op

A
  • owned by workers in the business
  • In some cases, workers facing redundancy might come together, pool their funds to buy the factory they’re working in and continue to run it as a co-op business
  • E.g Sustainable Ireland
24
Q

What are the advantages of a cooperative?

A
  • Members can achieve success in the business which wouldn’t have been possible otherwise
  • Profits are divided amongst members depending on how much business they do with the cooperative
  • Each member has an equal say in how the co-op is run because each member only has one vote
  • Limited liability
25
Q

What are the disadvantages of a co-operative?

A
  • Many co-op’s are too small to compete with other types of businesses
  • They often do not have enough money to expand and adapt to new technology
26
Q

Semi-state companies/state-sponsored bodies

A

Companies and organisations owned by the state

27
Q

Why does the state provide goods and services?

A
  • Some services may be loss-making, so private firms wouldn’t run them. Yet they are necessary so the government will still provide them
  • Because of Ireland’s small size, some types of business would be too expensive to set up e.g. rail network
  • For security reasons, the government will always keep control of services like the Gardaí and army
28
Q

What are the advantages of state ownership?

A
  • Essential services will always be available to everyone
  • The government receives a share of the profits from the profitable state sponsored bodies
  • Employment
29
Q

What are the disadvantages of state ownership?

A
  • If there is no competition, state firms may find it hard to remain efficient
  • Prices charged may be high due to a lack of competition
30
Q

Privatisation

A

Sale of semi-state company by the government

31
Q

Why would the government privatise a company?

A

○Because the semi-state company is losing money

○Because the semi-state company is performing so well, selling it would generate a considerable amount of money

32
Q

How do semi-state companies get finance?

A
  • Some semi-state companies charge for their services

* May borrow money from banks

JC Business (30 decks)

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