KK2 Types of legal business structure Flashcards
(26 cards)
What is an Unincorporated Business?
Has no seperate legal identity from its owners and has unlimited liability.
(Owner’s assests are no protected)
What is an Incorporated Business?
A business with a seperate legal identity with limited liability where personal asssests are protected.
Characteristics of a Sole Trader (Proprietor)
Only 1 owner who has full control over the business.
Unlimited Liability
Advantages of a Sole Trader
- Easy and low cost to extablish
- Owner has complete control
-No tax on profits, only on the owner’s income
-Owner keeps all profits
-No disputes with others
Disadvantages of a Sole Trader
-Unlimited liability
-Owners are held responsible for all loses
- Larger workload
- End of Business when owner dies
- Harder to finance
- Need a wide variety of skills
Characteristics of a Partnership
-owned by 2-20 people
- Unlimited Liability
-Owner still has full control of the business
Advantages of a Partnership
-Low start up costs
-Shared responsibility, workload and ideas
- Minimal governement regulations
- No tax on profits only on the onwers income
Disadvantages of a Partnership
-More chances of disputes
-Liabile for all partners debts even before the partnership begins
- No seperate legal entity
Limited Liability is …
when shareholders of a company cannot be held personallly responsible for the debts of the business.
Impact on shareholders during liquidation?
The shareholders cannot be forcd to sell their personal assest to pay for the debts of the business
LTD
Limited Liability
Public Listed Companys contains what after it name
LTD
Private Limited Companies contain what after it name?
PTY LTD
What is PTY LTD
Proprietary Limited
Characteristics of a Private Limited Compant
- 1-50 shareholders
- Seperate Legal Entity
Advantages of Private Limited Companies
- Limited liability
- Easier to gain finance
- Capitial can be raised by offereing more shares to investors
-Legacy of the company can carry on after owners or directors are gone
-Greater spreads of risks amongst shareholders
Disadvantages of a Private Limited Company
- More expensive and complex to start up
- More reportin requirements to shareholders and ASIC
-Restricted to numbers of shareholders
-Shares can not be traded freely
Characteristics of a Public Listed Company
- Minimum of 5 shareholders with no max amount
- Seperate Legal Entity
- Shares are listed in ASX
- Members of the public can buy/sell shares
-LTD
Advantages of Public Listed Companies
- Greater acess to finance
- Less work load
-limited Liability
-lower company tax rates
disadvantages of a public listed company
- high set up and ongoing legal costs
-Double tax (personal and company) - More Government Regulations
- No control by owners
Characteristics of Social Enterprise
Produce goods and services for the public
Primary objective being to fufill a socia cause
Funds are used for what the enterprise support
Advantages of a Social Enterpise
- Opens up new markets
- More profits as they are meeting a social need (embraces empathy of targets)
- Supported by general public
Disadvantages of a Social Enterprise
- Difficult to gain capital to start
- Significant operating costs
- Difficult to focus on social and financial objectives.
Characteristics of a Government Business Enterprise
-Owned an operated by the government and oter businesses
-Participates in commercial activities with objectives of making a profit
