Forms of ownership

Question 1

what to consider when choosing form of ownership

Answer 1

• start-up cost/future capital
• size/nature of business
• tax
• how businesses = controlled/managed
• risk involved
• how capital = contributed
• how profits/losses are shared
• who is resp. for debts/liabilities

Question 2

entrepreneur

Answer 2

people who find opportunities, calculate risks and then create a business

Question 3

qualities of an entrepreneur

Answer 3

want responsibility
good leadership/management skills
perseverance
high energy
organized
passion
flexibility
self - confidence
commited
independant
risk takers
strong work ethic
innovative/creative
willpower 2 overcome obstacles
clear vision

Question 4

profit vs non profit organisations

Answer 4

profit

• aim = to make profit
• capital = contributed by owners
• pay tax

non- profit

• aim = promote social cause
• funds from donations and gov grant = capital
• no tax

Question 5

adv vs disadv of a sole proprietor

Answer 5

adv
- easy, cheap
- easy/quick desicion making
- owners = full profit
disadv
- unlimited liability
- no legal personality
- no continuity
- owner = all risks
- overworked
- capital = limited 
no job security

Question 6

adv vs disadv of a partnership

Answer 6

adv

• easy/cheap to start
• more capital than sole trader and easier to get credit
• liabilities/responsibilities = shared

disadv

• unlimited liability
• no legal personality
• no continuity
• disagreements betw partners
• decisions take longer
• capital = limited to no. of partners allowed to contribute

Question 7

adv vs disadv of a Close corporation

Answer 7

adv

• limited liability
• legal personality
• continuity
• easy/cheap to start

disadv

• capital contribution= limited to 10 members
• liable for losses
• financial audit for loans
• decisions take longer
• more chance of conflict

Question 8

adv vs disadv of a private company

Answer 8

adv

• limited liability
• legal personality
• continuity
• more capital bc more shareholders
• no AGM

disadv

• complex start
• no capital from public
• double taxation
• yearly financial statements = reviewed by professional, which means more expenses

Question 9

adv vs disadv of a personal liability company

Answer 9

adv

• limited liability
• legal personality
• continuity
• no AGM

disadv

• complex start
• no capital from public
• double taxation
• yearly financial statements = reviewed by professional, which means more expenses

Question 10

adv vs disadv of a public company

Answer 10

adv

• limited liability
• legal personality
• continuity
• capital from public
• attract skilled workers bc can pay well
• job security
• strict requirements to protect shareholders

disadv

• complex start
• certain info must legally be published
• AGM = necessary
• failure = large scale unemployment
• shareholders = little/no input

Question 11

adv vs disadv of a state owned company

Answer 11

adv

• limited liability
• legal personality
• continuity
• members share priorities to achieve common goals
• better production bc members work for themselves
• dec made = fair and democratic

disadv

• no high salaries
• success dep. on loyalty of members
• difficult to get loans bc profit isnt main priority
• decision making = time consuming
• auditing of financial statements is compulsory