The flashcards below were created by user
on FreezingBlue Flashcards.
what choices does an entrepreneur make when setting up a business?
- 1. organisational options
- 2. production options
- 3. financial options
what are the three organisational options?
- 1. sole trader
- 2. partnership
- 3. private limited company
what is a sole trader
person who sets up, owns and runs their own business e.g. hairdresser
what are the advantages of a sole trader?
- 1. easy to set up... no government permission needed.. few legal registration requirements
- 2. keep all the profits... great motivation
- 3. confidential.. do not have to publish final accounts
- 4. full control.. makes all the decisions
what are the disadvantages of a sole trader?
- 1. unlimited liabiltiy
- 2. difficult to run a business alone.. no one to help
- 3. hard to raise money.. cannot sell shares and hard to get loans
- 4. results in long hours and lots of stress
what is a partnership?
business owned by and managed by between 2 and 20 owners called partners... pool their resources and talents to make a profit e.g. doctors
what are the advantages of a partnership?
- 1. easy to set up... no government persmission.. few legal registration requirements.. deed of partnership
- 2. more capital
- 3. better decisions
- 4. confidential
what are the disadvantages of a partnership?
- 1. unlimited liability
- 2. profits have to be shared
- 3. disputes may arise
- 4. slower decision making
what is a private limited company?
business set up by between one and 50 shareholders... ltd.. one owner must have two directors.. separate legal identity e.g. Pony Tales Stables Ltd
advantages of a private limited company?
- 1. limited liabiltiy
- 2. easier to raise capital
- 3. more knowledge, skills, experience... better decisions
- 4. pay less tax.. corporation tax
- 5. continuity of existance
disadvantages of a private limited company?
- 1. complicated to set up.. memorandum of association... articles of association.. form A1.. certificate of incorporation
- 2. must publish final accounts
- 3. profits have to be shared
- 4. a lot of legal requirements.. financial a/c must be audited annualy
what are the three production options?
- 1. job production
- 2. batch production
- 3. mass production