schedule B

Question 1

benefits of being a sole trader (7 points)

Answer 1

• very fast to sell products
• quick and easy to set up
• business can always be transferred to a LTD once launched
• simple to run
• owner has complete control over decisions
• minimal paperwork
• easy to close

Question 2

drawbacks of being a sole trader (3 points)

Answer 2

• unlimited liability
• harder to raise finance
• can pay higher tax than other company’s

Question 3

advantages of being a private limited company (4 points)

Answer 3

• limited liability
• easy to raise finance through the sale of shares
• stable form of structure
• business continues to exist even when shareholders change

Question 4

disadvantages of being a private limited company (3 points)

Answer 4

• greater admin costs
• public disclosure of company information
• directors legal duties

Question 5

advantages of being a public limited company (4 points)

Answer 5

• limited liability
• can sell shares on stock market
• access to international investors
• being on stock market gives brand awareness

Question 6

disadvantages of being a public limited company (6 points)

Answer 6

• threat of hostile takeover
• negative PR could give poor brand image
• must legally have directors and a secretary
• more paperwork
• control becomes more diluted
• have to produce a prospectus to become a PLC

Question 7

what is the goal of a not for profit

Answer 7

to serve a particular social, cultural, or environmental mission (charities)

Question 8

extrapolation definition

Answer 8

• The action of estimating or concluding something by assuming that existing trends will continue