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Revision Notes for Chapter 6
Factors affecting the choice of organization
Growth: Many businesses starts small, and eventually expand in size.
Finance: Sole traders can only raise limited amount of finance, so owners
often change to a partnership or a private limited. Additionally, owners of a
private limited company may convert to a public limited company to raise
even more finance.
Control: Some owners like to have full control over their business, so they
prefer to stay as sole traders.
Limited liability: Owners may change to a private limited company because
they will have limited liability. This means that they cannot bbe forced to use
personal wealth to pay business debts.
Type of business activities
The way in which profits will be used