unit 1- legal structure Flashcards
what is a sole trader?
a sole trader is an individual that sets up a business on there own
what are the advantages of being a sole trader?
- easy to set up
- own boss
- keep all rewards
- get to make all decisions
what are the disadvantages of being a sole trader?
- full responsibility
- raising finance
- risky
- unlimited liability
what is unlimited liability?
individuals are personally responsible for debt, and if they can’t be paid, then personal assets can be taken due to financial problems ie a car
what is limited liability?
only things that have been put into the business can be taken away to repay debt
what is a partnership?
where two or more people set up a business together
what are the benefits of becoming a partnership?
- other people’s input
- more people to help raise finance
- specialist skills
- shared responsibility
what are the disadvantages of being a partnership?
- dependant on actions of others
- unlimited liability
- if one person wanted to leave the business would go pete
- profits half to be shared
- shared decision making
what is a private limited company?
(LTD) they are owned by shareholders. and the owner can decide who can and can’t buy shares, normally only friends and family are shareholders
what is a public limited company?
(PLC) they are owned by shareholders but shares are open for everyone to buy
what are sources of finance?
- bank loan
- overdraft
- family and friends
- investor
- government assistance
- venture capital
- business angel
