Business ownership

• What is a not-for-profit organisation?

  A business that aims for purposes other than profit
• What do not-for-profit organisations do with their surplus?

  Reinvest it into the business or other uses
• What is an example of a not-for-profit organisation?

  A charity
• How are charities primarily funded?

  By donations
• What is the aim of a social enterprise?

  To help society
• How do social enterprises generate income?

  By selling products or services
• What do social enterprises do with their profits?

  Use them to benefit society
• What is a public limited company (PLC)?

  A business that sells shares to the public
• Who are the owners of a PLC called?

  Shareholders
• What is the role of a CEO in a PLC?

  To manage and oversee business activities
• What does 'floating on the stock exchange' mean?

  Selling shares on the stock market
• What are the advantages and disadvantages of being a PLC?

  Advantages:

  • Ability to raise finance through share capital
  • Shareholders have limited liability
  • Increased negotiation opportunities with suppliers

  
  

  Disadvantages:

  • Expensive to set up (£50,000 minimum)
  • Complex accounting and reporting requirements
  • Greater risk of hostile takeover
  • Shareholders expect dividends
  • Potential for decision-making conflicts
• What is the minimum setup cost for a PLC?

  £50,000
• What is a private limited company (Ltd)?

  A business with limited liability and invited shareholders
• What do private limited companies pay on their profits?

  Corporation tax
• What is a disadvantage of founding a private limited company?

  More paperwork is required
• What are the advantages and disadvantages of a private limited company?

  Advantages:

  • Limited liability for owners
  • Opportunity to be one's own boss
  • Protection from outside influence in shareholding
  • Ability to raise money by selling shares

  
  

  Disadvantages:

  • More paperwork involved
  • Financial information may be visible to others
  • Time-consuming to set up
  • May need professional help for finances
  • Shareholders expect dividends
• How many owners can a partnership have?

  Between 2 and 20 owners
• What is a deed of partnership?

  A document outlining partnership rules
• What tax do owners in a partnership pay on their earnings?

  Income tax
• What are the advantages and disadvantages of a partnership?

  Advantages:

  • Quick and easy to set up
  • Shared decision-making
  • Shared responsibility for debt
  • More skills and ideas from partners
  • More capital available to invest

  
  

  Disadvantages:

  • Long work hours may be required
  • Profits must be shared
  • Potential for conflict among owners
  • Risk of unlimited liability
  • One partner may not uphold responsibilities
• What is a sole trader?

  A business owned and run by one person
• What is the liability of a sole trader?

  Unlimited liability
• What type of tax do sole traders pay on their earnings?

  Income tax
• What are the advantages and disadvantages of sole trading?

  Advantages:

  • Quick and easy to set up
  • Full control over business decisions
  • Keeps all profits

  
  

  Disadvantages:

  • Risk of unlimited liability
  • Long work hours may be required
  • High level of responsibility
  • Owner may perform many roles