types of businesses Flashcards
(22 cards)
a business owned and operated by one person
sole trader
a business owned by 2-20 partners
partnership
a business that has a separate legal entity from its shareholders.
company
a business or person buys the right to use the name, products and services of an existing business
franchise
a business that has 5 members with shared management and equal voting rights.
cooperative
public company has a minimum of 1 shareholder proprietary (private) has 1-50
company
owner is personally responsible for business debts, their personal assets may be sold to meet outstanding business debts
sole trader
the partners are jointly responsible for business debts, personal assets may need to be sold to meet business debts
partnership
shareholders are limited to the value of their shares for business debts. no personal assets can be sold
company
liability of the owners of a franchise
depends on if the franchise is set up as a sole trader, partnership or company
members are limited to the value of their investment for business debts
coopeerative
advantages of being a sole trader
simplest and cheapest to establish, owner has control over all decisions, fewer government requirements.
advantages of having a partnership
simple and inexpensive to establish, more money and skills, share of losses
advantages of a company
limited liability, raises money through shareholders ,run by board of directors, unlimited life
advantages of a franchise
establishes reputation, products or service, advertising and market support
advantages of a cooperative
inexpensive to register, equal voting rights, limited liability
disadvantages of being a sole trader
unlimited liability, owner suffers all losses
disadvantages of a partnership
unlimited liability, profits must be shared, disputes between partners
disadvantages of a company
expensive to set up ad operate,
disadvantages of a franchise
franchisor controls descisions and operations, profit must be shared with franchisor
disadvantages of a cooperative
only one vote for each member, little to no profit distributed to members.
