Types of Businesses

Question 1

-Expensive to set up and operate
-Complex reporting requirements

Answer 1

Company Disadvantages

Question 2

Limited liability-
members are limited to the value of their investment for business debts.

Answer 2

Cooperative liability

Question 3

Depends on if the franchise is set up as a sole trader, partnership or company.

Answer 3

Franchise Liability

Question 4

-Unlimited Responsibility
-Owner suffers all losses
-Difficult to take holidays or leave

Answer 4

Sole Trader Disadvantages

Question 5

-Simplest and cheapest to establish
-Owner has control over all decisions
-Owner keeps all profit
-Fewer government reporting requirements

Answer 5

Sole Trader Advantages

Question 6

Limited liability- shareholders are limited to the value of their shares for any business debts. No personal assets can be sold.

Answer 6

Company Liability

Question 7

-Limited liability
-Can raise lots of money through shareholders
-Unlimited life: change in shareholders doesn’t cease business
-Run by board of directors not the shareholders

Answer 7

Company Advantages

Question 8

A business owned and operated by one person

Answer 8

Sole Trader

Question 9

-Minimum of 5 shareholders needed
-Little to no profit distributed to members
-Only one vote each member
-Ongoing education for members

Answer 9

Cooperative Disadvantages

Question 10

A business which has at least 5 members with shared management and equal voting rights. It is a separate legal entity.

Answer 10

Cooperative

Question 11

-Established reputation, products or service, and store layout.
-Advertising and marketing support.
-Franchisor provides training

Answer 11

Franchise Advantages

Question 12

A business or person (franchisee) buys the right to use the name, products, and services of an existing business (franchisor).

Answer 12

Franchise

Question 13

Unlimited liability-
the owner is personally responsible for business debts. Their personal assets may need to be sold to meet outstanding business debts

Answer 13

Sole Trader Liability

Question 14

Unlimited Liability-
the partners are jointly responsible for business debts. Their personal assets may need to be sold to meet outstanding business debts.

Answer 14

Partnership Liability

Question 15

-Unlimited liability
-Profits must be shared
-Disputes between partners
-Ceases if a partner dies, leaves or retires

Answer 15

Partnership Disadvantages

Question 16

-Franchisor controls decisions and operations
-Paying ongoing fees to the franchisor
-Profit must be shared with franchisor.

Answer 16

Franchise Disadvantages

Question 17

A business owned and operated by 2 to 20 partners

Answer 17

Partnership

Question 18

-Simple and inexpensive to set up
-Partners bring more money and skills
-Share of losses

Answer 18

Partnership Advantages

Question 19

-Inexpensive to register
-Equal voting rights
-Limited liability
-No minimum age limit of members

Answer 19

Cooperative Advantages

Question 20

A business which has a separate legal entity from its shareholders. A public company has a minimum of 1 shareholder. A proprietary (private) company has 1-50.

Answer 20

Company