Different forms of business

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  • Created by: hamishc
  • Created on: 27-04-16 20:57
What are public sector businesses?
Organisations owned and run by the government. They provide a service to the public rather than making a profit, funded by the UK taxpayer.
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What are private sector businesses?
Organisations owned and run by private individuals. Aim to make a profit unless they are charities.
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What are charities, social enterprises and mutual organisations?
Charities make money from donations which is used to fund charitable activities, Social enterprises are normal businesses with a social objective , Mutual organisations aim to offer their customers the best possible value on products and services.
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What is unlimited liability?
The business and the owner are seen as one under the law (e.g. sole traders), this means business debts are personal debts, meaning personal assets can be taken to pay the debt (e.g. house)
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What is limited liability?
Means owners are not personally responsible for the debts of the business (e.g. PLC's)
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What is a sole trader?
A individual trading in his or her own name, or under a suitable trading name.
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Advantages of being a sole trader?
Freedom to control business decisions, the sole trader is entitled to all business profits, simple to set up and maintain (paperwork/ book-keeping), saving on fees as there are no legal costs for drawing up an ownership agreement.
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Disadvantages of being a sole trader?
Risky as there's no-one to share responsibility with, long hours of work needed to meet tight deadlines, sole traders have limited skills in some areas, finance is limited to the amount the owner has or can borrow.
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More disadvantages of being a sole trader?
Vulnerable as there is no cover if the trader is ill, unlimited liability means sole traders are responsible for all debts of the business.
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What are the properties of private limited companies (Ltd's)
Can't sell shares to the public, share prices not quoted on the stock exchange, shareholders can't sell shares without agreement from other shareholders, often small family businesses, no minimum share capital required.
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What are the properties of public limited companies (PLC's)
Can sell shares to the public by offering a prospectus to inform people before they buy, share prices quoted on the stock exchange, shares freely transferable, start as private then go public, need £50,000 of share capital (25% on stock exchange).
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Difference between directors in a large PLC compared to a small PLC.
Larger PLC = directors are elected to the board by shareholders, Small PLC = directors are usually shareholders (owners) of the business.
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Other cards in this set

Card 2

Front

What are private sector businesses?

Back

Organisations owned and run by private individuals. Aim to make a profit unless they are charities.

Card 3

Front

What are charities, social enterprises and mutual organisations?

Back

Preview of the front of card 3

Card 4

Front

What is unlimited liability?

Back

Preview of the front of card 4

Card 5

Front

What is limited liability?

Back

Preview of the front of card 5
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