private sector Flashcards
(19 cards)
what are the 3 types of organisations in the private sector
sole trader,partnership and a private limited company
who are sole traders controlled by?
one private individual
who are sole traders owned by?
one private individual
how are sole traders financed?
personal savings,bank loans or grants
what are the advantages of being a sole trader?
it easy to set up
the owner gets to keep all of the profits
the owners gets to make all of their own decisions
what are the disadvantages of being a sole trader?
unlimited liability
raising finance can be difficult-banks often see sole traders as high risk
workload and responisibilities cannot be shared with another owner
what does unlimited liability mean?
if the business wasaa to go bankrupt,the individual owner is responisible for paying it back.this could mean their personal possessions are taken to pay for this
who are partnerships controlled by?
the 2-20 partners
who are partnerships owned by?
2-20 partners
how are partnerships finaced?
the investment of each individual partner
what are the advantages of being a partnership?
more financed raised compared to a sole trader
workload and responsibility can be shared between partners
partners each bring different experience and expertise to the business
what are the disadvantages of being a partnership?
unlimited liability
profit is split between partners
there could be disagreements between partners
the actions of one partner are legally binding on the other partners
who are private limited companies controlled by?
board of directors who run the business on behalf of the shareholders
who are private limited companies owned by?
1-50 private shareholders
how are private limited companies financed?
share equity invested by shareholders
what are the advantages of being a private limited company?
limited liability
there is more financed raised compared to sole traders and partnerships
viewed as less risky compared to sole traders and partnerships so it will be easier to obtain finance
what does limited liability mean?
if the business goes into debt then the owners are not responsible for paying it back.they can only lose what they invested
what are disadvantages of being private limited company?
finacnial accounts must be published which the public and competitors can see
more complicated and expensive to set up compared to sole traders and partnerships
profits shared between many shareholders by paying dividends
