Sole Trader
Does a sole trader have unlimited liability?
Yes
How many Partners in a partnership?
2-20
What is two disadvantages of being a public company?
Strict legal/reporting requirements, and loss of control due to many shareholders.
How many shareholders in a private company.
1-50 shareholders
A business called SilverPeak Engineering Pty Ltd is owned by a small group of investors. It cannot sell shares to the public, its financial information is kept private, and the owners have limited liability. Decisions are made by a board chosen by the shareholders.
Private Company (Pty Ltd)
Two Benefits of a sole trader business?
Full Control - owner makes all decisions.
Keeps all profits - Does not need to split profits
Low Start Up Cost
Simple business structure and easy set up
Name two benefits of running a partnership.
Shared workload, shared skills, or shared capital.
How many Shareholders are in a public company?
Minimum of 5+ shareholders.
What are two disadvantages of being a private company?
Limited ability to raise capital and more legal requirements than sole traders or partnerships.
Two architects decide to combine their skills and open a design studio together. They jointly sign contracts, share profits and losses, and are both personally responsible for any debts the business cannot pay. They make major decisions together and rely on each other’s expertise.
Partnership
Usual Number of owners/Employees?
1 Owner usually up to 20 employees
What type of liability do most partnerships have?
unlimited liability
Public companies are legal entities separate from their shareholders and are listed on the ASX or another stock exchange. Because of this, what two requirements must they follow when offering shares to the public?
They must issue a prospectus to potential investors
They must follow the rules set by the ASX and ASIC for public companies
What are two benefits of being a private company?
More control over decision‑making and greater privacy over financial information.
A freelance photographer runs her business alone. She owns all equipment, keeps all profits, and is personally responsible for any debts or legal issues. She does not have partners or shareholders and makes every business decision herself.
Sole Trader
Two negatives of a sole trader business?
Owner Responsible for all debts
Limited capital
Harder to Grow
Long working hours
Give two disadvantages of a partnership.
Potential disagreements, shared profits, or unlimited liability.
Public companies must follow strict rules set by Australian law. What is the name of the Act they are required to follow?
The Corporations Act 2001.
How is a Private business usually identified?
PTY LTD
A large mining company sells shares on the ASX and must follow strict reporting rules set by ASIC and the ASX. It issues annual financial statements, has thousands of shareholders, and is a separate legal entity from the people who own its shares.
Public Company (Ltd)
Ava owns a profitable sole‑trader car‑detailing business, but she can’t understand why she isn’t as successful as Brisbane Car Detailing Service, a large public company. Identify the key structural differences that limit her ability to compete at the same level.
Limited access to capital, fewer employees/resources, and no ability to sell shares to fund expansion.
Sarah runs a small cleaning business on her own and struggles to keep up with demand. She decides to form a partnership with another cleaner, and suddenly the business can take on more clients and operate more efficiently. What major benefit of becoming a partnership does this situation show?
Sharing the workload and combining skills.
Public companies are separate legal entities, which affects the liability of their owners. What type of liability do shareholders in a public company have, and what does this mean for them?
Shareholders have limited liability — they can only lose the money they invested and are not personally responsible for the company’s debts.
Private companies are considered separate legal entities from their shareholders. What does this mean for the company and for the people who own it? Explain two points.
The company can enter contracts, own assets, and be sued in its own name – Shareholders are not personally responsible for the company’s debts (limited liability)
A business operates internationally and is a separate legal entity from its owners. It raises money by selling shares, but only to a limited group of approved investors rather than the general public. It has limited liability for owners, must follow ASIC regulations, and includes “Ltd” in its name — but it is not listed on the ASX.
Private company or an unlisted public company.