Different Types Of Business

Question 1

What are the 3 types of businesses

Answer 1

Sole trader

Partnership

Company

Question 2

What are 3 benefits for sole trader

3 negatives

Answer 2

Benefits
Low start up costs

Greatest freedom from regulations

You get to keep all the profits

Negatives
Unlimited liability

No continuity

Difficulty raising capital

Question 3

What are 3 benefits for a partnership

3 negatives

Answer 3

Benefits
Shared start up costs

Shared management responsibilities

Limited outside regulation

Negatives
Shared profits

Unlimited liability

No continuity

Question 4

What are 3 benefits for a company

3 negatives

Answer 4

Benefits
Limited liability

Transfer of ownership is easy

Easy to raise capital

Negatives

Highest amount of regulations

Slow start up

High start up costs

Question 5

What is the difference between legal entities and accounting entities

Answer 5

A legal entity is a company that is a separate legal entity from its owners.

Accounting entities are businesses where the owners assets and business assets are one in the same.

All the 3 business types are accounting entities but companies are also legal entities