Types of busineses Flashcards
What is a sole trader?
A sole trader is one person who owns their own business, for example a window cleaner.
What is a partnership?
A partnership is a business with 2-20 owners, for example solicitors.
What is a private limited company (Ltd)?
A private limited company (Ltd) is a business in which people can only buy shares with the permission of the business/board of directors.
What is a public limited company (Plc.)?
A public limited company (Plc.) is a business in which any one can buy shares on the stock exchange.
What is a charity?
A charity is a business set up with a specific purpose; they do not make profit. For example Oxfam or Cancer Research.
What is a voluntary group?
A voluntary group is a business staffed by unpaid volunteers, for example Women’s Royal Voluntary Service.
Where does profit made by a sole trader go?
Profit made in this type of business is used as a wage for the business owner.
Where does profit made by a partnership go?
Profit made in this type of business is divided between the partners, unless otherwise stated in the Deed of Partnership.
Where does profit made by both Ltd and Plc. companies go?
Profit made in these types of businesses is used as a dividend to the shareholder.
Where does profit made by both charities and voluntary groups go?
Profit made in these types of businesses is retained and put back into the business for future use.
Which types of business have Unlimited Liability?
Sole traders and partnerships.
Which types of business have Limited Liability?
Ltd and Plc. companies.
What is Unlimited Liability?
Unlimited liability refers to the legal obligations general partners and sole proprietors because they are liable for all business debts if the business can’t pay its liabilities.
What is Limited Liability?
the condition by which shareholders are legally responsible for the debts of a company only to the extent of the nominal value of their shares.
