Different Business Forms

Question 1

What are some forms of ownership

Answer 1

Private and public

Question 2

What does private ownership involve

Answer 2

• sole traders
• private limited company
• ltd
• non for profit organisation

Question 3

What does private ownership involve

Answer 3

• sole traders
• private limited company
• ltd
• non for profit

Question 4

Advantages of sole trader

Answer 4

• make all key decisions
• easy to set up
• keep all profits
• be own boss

Question 5

Disadvantage of sole trader

Answer 5

• finance limited
• lack of skills
• long working hours
• unlimited liability

Question 6

Advantage of private limited company

Answer 6

• limited liability
• control over who buys shares
• managers can be employed

Question 7

Disadvantage of private limited companies

Answer 7

• legal procedure to set up
• accounts are public
• decreased control/profit

Question 8

Advantage of public limited company

Answer 8

• limited liability
• can adverse shares to public
• raise finance easily
• media coverage

Question 9

Disadvantage of public limited companies

Answer 9

• can’t control who buys shares
• can loose control
• have to pay dividends

Question 10

Advantage of not for profit

Answer 10

• good rep
• encourages customers/employees

Question 11

Disadvantage of not for profit

Answer 11

• need donations

Question 12

Advantage of public sector

Answer 12

• free to anyone
• provides essential services

Question 13

Disadvantage to public sector organisation

Answer 13

• government need revenue
• only for governments

Question 14

Reasons for changing business form

Answer 14

• growth: owner may raise capital by selling shares or becoming a plc
• control: degree of control desired by the original owners
• protection: may want to be protected from limited liability