Chapter 26 - Forms of businesses Flashcards
(15 cards)
What is a Sole Trader?
A business owned and controlled by one individual
Sole traders have complete control over their business decisions.
Define Partnership.
A business owned by two or more people
Partnerships often involve shared responsibilities and profits.
What is a Private Limited Company (Ltd)?
A business owned by shareholders with limited liability; shares are not publicly traded
This structure protects personal assets from business debts.
What characterizes a Public Limited Company (Plc)?
A business whose shares are traded on the stock exchange
Public companies must meet specific regulatory requirements.
What is meant by Limited Liability?
Shareholders are only liable for the money they invested
This means personal assets are protected from business debts.
Define Unlimited Liability.
Owners are personally responsible for all business debts
This applies primarily to sole traders and partnerships.
What is a Franchise?
A business that operates under the name of an established brand
Franchisees pay fees to franchisors for the right to operate.
Who is a Franchisor?
The owner of the brand who licenses others to use it
Franchisors provide support and brand recognition to franchisees.
Who is a Franchisee?
The individual who buys the right to operate a franchise
Franchisees benefit from established business models and marketing.
What is a Lifestyle Business?
A business started to suit the owner’s personal goals or lifestyle
These businesses prioritize work-life balance and personal fulfillment.
Define Social Enterprise.
A business with social or environmental aims
Social enterprises reinvest profits to further their social objectives.
What does Not-for-Profit mean?
Organisations that reinvest profits back into their aims instead of distributing them
These organizations focus on mission-driven goals rather than profit maximization.
What is a Deed of Partnership?
A legal agreement between partners outlining roles and profit sharing
This document helps prevent disputes among partners.
What is an Incorporated Business?
A company with a separate legal identity from its owners
Incorporation provides limited liability protection to its owners.
Define Unincorporated Business.
A business where the owner and the business are legally the same
This structure exposes the owner’s personal assets to business liabilities.
