Ventures & Strategy

Question 1

What are advantages of a sole proprietorship?

Answer 1

Management of the business is the same.

Less people to have on payroll
Simple taxation policies (usually on P.I)
Easy to form/dissolve
Secrecy

Question 2

What are disadvantages of a sole proprietorship?

Answer 2

Unlimited Liability
Responsible for legal fallout
Lack of continuity
Time commitment is needed
Management Limitations

Question 3

What is a partnership?

Answer 3

A partnership is when two or more people combine tangible assets to run a business

Question 4

What are some advantages of a partnership?

Answer 4

Shared Liabilities
Easy to form
Diversification of skills
More liquid assets
Better decision making

Question 5

What are some disadvantages of a partnership?

Answer 5

Unlimited Liability
Management Difficulties
Difficult to withdraw investments (if it sinks)

Question 6

What is the definition of a corporation?

Answer 6

A corporation legally is a separate entity. It is a business that is not “directly” tied to the owner(s).

Question 7

What are some advantages to a corporation?

Answer 7

Public Shareholders (useful for raising money/increasing the ventures market value)

Senior Management
Board of Directors: Sets the goals of the organization and ensures that shareholders have a voice.

Question 8

What are the two types of shareholders?

Answer 8

Common: Have voting rights but don’t receive preferred treatment (usually the highest risk but chance of higher rewards)

Preferred: No voting rights but dividends can be claimed before common shareholders (safer option)

Question 9

What’s a dividend?

Answer 9

A dividend is the distribution of profits by a corporation to its shareholders.