unit 1 Flashcards
(18 cards)
Why start a business?
The skill involved in wanting to start and run a business is called enterprise. The individual who sets up their own business is called an entrepreneur.
The four main types of business ownership in the private sector are:
- Sole Trader
- Partnership
- Private Limited Company (Ltd)
- Public Limited Company (PLC)
explain a solo trader
A sole trader (or sole proprietorship) is a business which is fully owned by one person who has complete control over how the firm is run.
Setting up as a sole trader
register herself as self-employed with Revenue and Customs and apply for a trading licence.
Advantages of operating as a sole trader
Advantages
Low start-up costs
All profits are kept
Better control
Disadvantages of operating as a sole trader
Unlimited liability
Lack of capital
long hours
what is a Partnership
A partnership occurs when two or more people combine to form a business. .
Advantages of operating as a partnership
Low start-up costs
Shared workload
Specialisation
Disadvantages of operating as a partnership
Loss of autonomy
Conflict between partners
Unlimited liability
how many people need to be in a partnership
minimum of 2
maxiumn of 20
what is Limited Companies
limited company is a separate legal entity from its members. This means that a company can raise finance in its own right and any debt which is run up belong to the company and not the owners.
There are two main types of limited company in the UK
- a private limited company (Ltd)
- a public limited company (Plc)
what is Private limited company (Ltd)
A private limited company is a business which is incorporated and therefore is a separate legal entity from its owners.
Advantages of operating as a Private limited company
Advantages
Raising capital
Limited liability
Continuity
Control
Disadvantages of operating as a Private limited company
Disadvantages
Sharing of profits
Lack of privacy
Set up costs
Public limited company
The owners of a public limited company are its shareholders and each shareholder enjoys the benefit of limited liability.
Advantages of operating as a Public limited company
Advantages
Raising capital -
Limited liability
Continuity
Disadvantages of operating as a public limited company
Disadvantages
Set up costs
Divorce of ownership and control -
Less privacy
