The Advantages And Disadvantages Of Each Type Of Ownership Flashcards
(18 cards)
What is a key advantage of being a sole trader?
The sole trader makes all of the decisions themselves, which is quick and does not lead to disagreements.
What is a disadvantage of being a sole trader?
The sole trader has unlimited liability.
What is one challenge a sole trader may face in terms of funding?
It may be difficult to raise enough money to establish or grow the business.
What is an advantage of a partnership regarding expertise?
The business owners may have wider expertise and can share ideas and decision-making.
What is a disadvantage of a partnership if one partner leaves?
If a partner leaves, the business no longer exists.
How is profit distribution handled in a partnership?
The profits are shared.
What is an advantage of a private limited company regarding liability?
The owners have limited liability.
What does ‘Ltd’ after a business’s name signify?
‘Ltd’ may make it appear to be a bigger or more long-established business.
What is a benefit of a private limited company concerning finance?
Can be easier to raise finance to establish or grow the business.
What happens to a private limited company if shareholders change?
The business continues to trade even if shareholders change.
What is a disadvantage of a private limited company in terms of complexity?
More complex to set up than a sole trader or partnership.
What is a disadvantage of a private limited company regarding financial information?
The business’s financial information is published.
What is a requirement for private limited companies concerning reporting?
More requirements to report information to organisations such as HMRC and Companies House.
Fill in the blank: The sole trader keeps all of the _______.
profits
True or False: Financial information in a partnership is kept private.
True
What may lead to disagreements in a partnership?
There may be disagreements between partners.
Fill in the blank: A sole trader may face a lot of _______ on just one person.
pressure
What is a potential challenge for a sole trader if they are ill?
It can be difficult to run the business if the owner is ill or takes time off.
