Types of Firms Flashcards
A business owned and operated by 1 person
Sole trader
A business owned by 2 partners
Partnership
A business which has seperate legal entity from its shareholders
Company
A business/person buys the right to use the name/products and services of an existing business
Franchise
A business which has at least 5 members with shared management and equal voting rights
Cooperation
Businesses with unlimited liability
Sole trader and Partnership
Businesses with limited liability
Company and cooperation
What is a liability
A condition where someone is legally responsible for something
Advantages of sole trader
Simple/cheap
Owner has control of business
Owner keeps all profits
Fewer govt reporting
Advantages of Partnership
Simple/cheap
partners bring more money/skills
Share of losses
Advantages of company
Limited liability
Raise money through shareholders
Change in shareholders doesn’t effect business
Run by directors not shareholders
Franchise advantages
Established reputation
advertising/market support
Franchisor provides training
Cooperative advantages
Inexpensive
Equal voting rights
Limited liability
No minimum age limit
Sole trader disadvantages
Unlimited liability
Owner suffers all loses
Difficult to take holidays/leave
Partnership disadvantages
Unlimited liability
Profits must be shared
Disputes between partners
Ceases in partner dies/leaves
