Business- 3.1.2

• Who is a sole trader run by?


  One individual
• can sole traders employ others?


  Yes.- but may also operate on their own
• why are sole traders becoming increasingly popular?


  enjoy working for themselves, keep all the profit
• What type of liability do sole traders have?


  Unlimited
• what does unlimited liability mean?


  the owners are liable for all debts that the business may incur
• what happens if a sole trader incurs debt?


  the owners personal assets are at risk as there is no limit to their liability
• who are public sector organisations owned (and run) by?


  owned and run by government
• what are public sector organisations main objectives? give some examples of these organisation?


  Provide public services. Examples: NHS, state education, police
• who are private sector organisations owned and run by?


  Private individuals or groups.
• what are private organisations objectives? what are some examples?


  maximise sales and profit- e.g Tesco, Sainsbury's, Ford, Sony
• What taxes are paid by un/incorporated businesses?


  unincorporated- income tax

  Incorporated- corporation tax (higher than income)
• what does unincorporated mean?


  bound together- if business is in debt so is owner (vice versa)

  MARRIED to the business
• which type of private sector businesses have unlimited liability?


  UNINCORPORATED:

  sole trader

  partnership
• is a sole trader un/incorporated


  unincorporated so has UNlimited liability
• if a business in unincorporated it has NOT gone through…..?


  legal incorporation process so has unlimited liability
• sole trader: what happens if the business incurs debts that cannot be repaid?


  owners personal assets at risk- there is NO LIMIT to their liability
• what are the advantages of being a sole trader?


  • easier to set up than other legal structures
  • owner has more freedom and complete control over all aspects of business
  • high motivation
  • only have to declare profits to HMRC (His Majesty’s Revenue and Customs) to ensure they pay correct level of income tax
• what are the disadvantages of being a sole trader?


  • riskier as no legal distinction between owner and business
  • increased difficulty in gaining finance
  • high interest charges on loans as increased risk of failure
  • work load pressures
  • limited range of skills
• what is the difference between unincorporated and incorporated businesses?


  unincorp- income tax paid, married to business, owners debt= business debt

  incorp- pay corporation tax
• whose permission must a private limited company have before selling shares?


  shareholders
• Does a public limited company have limited or unlimited liability?


  limited
• Are shares traded privately or publicly on the stock exchange for public limited companies?


  publicly on stock exchange
• what is market capitalisation?


  total value of issued shares of a public limited company
• what can public access to shares lead to in public limited companies?


  potential takeovers
• limited companies are ______ businesses?


  incorporated
• what liability do limited companies have?


  Limited liability- has a separate legal identity from the individual owners
• limited laibility is when the liability of the owners of a business is….?

  limited to the fully paid-up value pf the share capital
• what must firms go through to gain limited status?


  legal incorporation- must produce legal documents such as Memorandum of Association and Articles of Association
• where must limited companies register?

  Companies House
• What are the owners of a business called?

  shareholders
• what are the Memorandum or Association and Articles of Association?


  Memorandum of association- name, registered office and what company will do

  Articles of association- rules for running the company
• what must limited companies give to Companies House yearly?


  true set of account along with an annual return
• who can see public limited companies shares?

  The public-Shareholders, potential investors to see how their company is performing
• what are some advantages of being a limited company?


  • firms can raise money by selling shares
  • only have to share accounts annually
  • shareholders rewarded by dividends and value or shares increasing
• who can see private limited companies shares?


  Existing or potential Shareholders
• What are dividends?


  share in the profits of a company, distributed equally over each share

  The amount of profit paid to shareholders is decided by the board of directors
• how big is a private limited company?


  small-medium sized often run by the family or small group of individuals who own it
• When can shares of a private limited company be sold?


  With the approval of the shareholders- shares are not sold on the stock exchange
• Incorporated businesses have______ liability?

  limited
• What does limited liability mean?


  The owners liability is limited to the fully paid-up value of share capital