2.1.3 Liability

Question 1

Unlimited liability

Answer 1

Owners are liable for any debts incurred by business
-sell assets & possessions & personally bankrupt
HIGH RISK & BAD

E.g. sole trader and partnership (smaller business ) = non corporate

Question 2

Limited liability

Answer 2

Owners not liable for the debts of the business
-lose no more than sum invested

Public limited company & Private limited company (larger firms)- corporate
IF these go wrong = liquidation

Question 3

Plc

Answer 3

• Public limited company
• Shares on stock market
• Legally separate ‘incorporated’
• Shareholder influence disclose info
• admin costs
• Easier to access finance

Venture capitalist - bigger

Question 4

L+d

Answer 4

Private limited company
Shares to family and friends

Business angel

Question 5

Sole trader

Answer 5

-single business owner with unlimited liability

+ve: Cheap, profit to owner, own decision no need to publish results

-ve: Unlimited liability = difficult to raise SOF

Question 6

Partnership

Answer 6

2 or more business owners

one has to have unlimited liability

Question 7

Limited companies SOF options

Answer 7

methods of finance (E)

1. loans
2. grants
3. overdraft
4. share capital
5. Venture capitalist

sources of finance (E)

1. business angel
2. peer-peer funding
3. crowdfunding

sources of finance (I)

1. retained profit
2. sell shares
3. owners capital/personal savings

Question 8

Unlimited companies SOF and method of finance options

Answer 8

E sources of finance

• peer to peer funding
• crowdfunding

E methods of finance

• overdraft
• grant
• bank loan

I source of finance

• retained profit
• owners capital