Chapter 4 - Types of Business Organisation Flashcards
(15 cards)
Sole Trader
A business that is owned and controlled by just one person who takes all of the risks and receives all the profits
Start-Up Capital
The finance needed when first setting up a business
Partnership
A business formed by two or more people who will usually share responsibility for the day-to-day running pf the business. Partners usually invest in the business and share profits
Unincorporated Business
A business that does not have a separate legal identity from its owners. The owners have unlimited liability
Unlimited Liability
If an unincorporated business fails, the owners might have to use their personal wealth to finance any business debts
Shareholder
A person or organisation who owns shares in a limited company
Private Limited Company
Often a small to medium sized company owned by shareholders who have limited liability. The company can only sell shares to family and friends, not the general public
Public Limited Company
Often a large company owned by shareholders who have limited liability. The company can sell its shares to the general public
Ordinary Shareholders
The owners of a limited company
Limited Liability
When shareholders of a limited company only risk the amount they have invested into the business and not any personal wealth if the business were to fail
Dividend
A payment, out of profits to shareholders as a reward for their investment
Collateral
Non-current assets offered as security against borrowing
Franchise
A business system where entrepreneurs buy the right to use the name, logo, and product of an existing business
Joint Venture
Two or more business agree to work together on a project and set up a separate business for this purpose
Public Corporation
A business organisation that is owned and controlled by the state
