Ownership types

Question 1

What are the 4 types of ownership

Answer 1

• Sole traders
• Partnerships
• Private limited companies (ltd)
• Public limited companies (plc)

Question 2

What is a sole trader?

Answer 2

A form of business that is owned/ managed by one person

Question 3

What the pros of a sole trader?

Answer 3

-Make all decisions

• Make all the profit
• easy to set up

Question 4

What are the cons of a sole trader

Answer 4

• All the liability

-cant take a holiday

-limited skills

-hard to raise finance

Question 5

What is a partnership

Answer 5

When 2 or more people pursue a common purpose in setting up a business like profit - as stated by the 1890 Partnership Act

Question 6

What are the pros of a partnership

Answer 6

• share workload

-simple paperwork

-more sources of finance than sole trader

-varied skill

Question 7

What are cons of partnership

Answer 7

• full liability
• collective decisions

-share profits

Question 8

What is a private limited company (Ltd)

Answer 8

Is a business where in all the shares are privately owned

Not for public advertisement - restrictions on who shares can be sold to

usually family owned

Question 9

Pros of Ltd

Answer 9

• Limited liability
• Profit kept between shareholders
• range of skills
• don’t have to publish revenues

Question 10

Cons of Ltd

Answer 10

• when selling shares you have to offer them up to everyone in the Ltd before leaving

-complicated paperwork

-financial papers of each account must be produced

Question 11

What is a public limited company (PLC)

Answer 11

A company on the stock market that is open to everyone.shareholders fund, own and get the profit of the company. there are capital gains.

Question 12

Pros of PLC

Answer 12

• diverse skills
• limited liability

-shares offered up on the shares market

Question 13

Cons of PLC

Answer 13

• many shareholders

-risk of hostile take over

• complicated paperwork
• have to provide information on financial statements / profits of the business

Question 14

-

Answer 14

-

Question 15

Cons of non-profitable organisations

Answer 15

hard to survive without constant profit made

Question 16

what 2 ownership types are considered “companies”

Answer 16

PLC + Ltd

Question 17

What are the pros of a company?

Answer 17

limited liability

brings in investors to raise finance

continues after death of founder

Question 18

what are the cons of a company?

Answer 18

have to register

have to disclose information on sales + profits

accounts must be independently checked

the founder does not have complete control of the business if there are investors