business start up
The flashcards below were created by user
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
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
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
business start up