Sole Traders
1. What are sole traders?
2. A sole trader's business does not have any ________ separate to its owners.
3. Why do people choose to start their business as a sole trader?
1. Sole traders are self-employed people who own and run their own business as an individual.
2. A sole trader's business does not have any legal identity separate to its owners.
3. Most people starting their own business typically begin with a limited budget and simple organization. Facing these constraints, they choose to operate as a sole trader.
1. What is a partnership?
2. There is no legal distinction between the _____ and the ______. The _____ are responsible for all the debts and obligations.
2. There is no legal distinction between the business and the partners. The owners are responsible for all the debts and obligations.
What is the difference between a company and a business?
What is a company?
Read all information
A business is the commercial activity of providing goods and services whereas a company is a specific legal structure.
A company is a secret legal entity, which offers limited liability and perpetual exisistence to its owners.
perpetual exisistence- company can continue to exist even if owners die or leave the business
limited liability- your personal assets are protected if your company faces debt or lawsuits, only the money you're investing into the business is at risk.
A non-profit is a business that does not aim to make profit but rather the main is aim is a social purpose.
A for profit is a business that aims to make money while also creating a positive impact on society.
Give an example of a sole trader business, a partnership business, a company, a non-profit, and a for profit.
1. Sole trader: photographers, personal trainer.
Company: Apple, Amazon
Partnership: Nike and apple- fitness tracking, protcer and gamble
Non-profits:habitat for humanity
for-profit: Stitch Co.
2. Who is liable for all the debt of the business?
1. Sole traders may employ other people, but they themselves make management decisions and have ultimate responsibility for the business.
2. The sole trader is liable for all the debt of the business or other claims (such as lawsuits)
1. Partnerships often use a _____, a legally binding document that sets out the _____ and _____ of the partners. (info about procedures for changing c______, _____ of profits, etc.)
2. What is a sleeping partner?
1. Partnerships often use a deed, a legally binding document that sets out the rights and duties of the partners. (info about procedures for changing circumstances, division of profits, etc.)
2. A sleeping partner is an investor who contributes to a business but does not take an active role in its day to day management.
What is a shareholder?
What is a reward/cost of being a shareholder?
A shareholder is an individual or entity that owns shares of stocks in a company. (makes them part owner)
2. A reward is price of shares increase in value if company does well, and the shareholder is not responsible for company's debts.
A cost is owning shares does not mean Indvidual's have meaningful say in decisions about the business.
1. A financial cooperative is an organization that provides _____ services to its____ with the goal of generating _____ while addressing social or economic needs, within a community.
2, A housing cooperative provides ____ for its members as opposed to providing _____ for ____ ________s.
1. A financial cooperative is an organization that provides financial services to its members with the goal of generating profit while addressing social or economic needs, within a community.
2, A housing cooperative provides housing for its members as opposed to providing rent for private landlords.
1. Name four advantages of being a sole trader.
2. Name four disadvantages of being a sole trader.
1. Advantages-
- Small business so the sole trader can interact with the customer which gives competitive advantage. - Complete control over the business. -Flexibility -All profits belong the sole trader.
2. Disadvantages
- Stress from making all decisions. -Competing against businesses by yourself -Lack of continuity in the event the owner dies or is inured. -Limited capital.
Name 4 advantages of partnerships
Name 3 disadvantages of partnerships.
four advantages of partnerships-
- Partners bring different skills and qualities so it can be more efficient due to specialization and division of labor. -There is more expertise. -Partners can assist each other in emergencies or when one is on vocational leave. -Higher chance of continuity
four disadvantages of partnerships-
- Each partner has unlimited liability and each partner is legally responsible for all of the business debts or actions of other partners. -Profits have to be shared. - Disagreements between partners.
1. 3 benefits of being a company
2. 3 disadvantages of being a company
1. -Gives enhanced status as it's recognized as the business being successful. - increases stability of business. -improves chances of further finance through loans and selling shares.
2. - Selling shares does not guarantee a desired amount of finance. - A company has no control over shares and the stock market. -Takes time and a lot of money to fulfill necessary legal requirements.
A workers cooperative is a business _____ and _______ c_______ by its employees, who share in the ____ and ______ making.
A producer cooperative is where _______ ________ on certain stages of ________.
A consumer cooperative providers a service to _______ who are also part ______ of the business.
A workers cooperative is a business owned and democratically controlled by its employees, who share in the profits and decision making.
A producer cooperative is where producers collaborate on certain stages of production.
A consumer cooperative providers a service to consumers who are also part owners of the business.
Offers a more varied _____ than a sole trader.
A great degree of _____ than a sole trader.
Offers a more varied service than a sole trader.
A great degree of accountability than a sole trader.
1. How can a business become a company?
Through a simple but very powerful process where the business and the owners of the business are ______ separated through a process where the business ____ with the state.
In a company, the liability of the company is ______ from the liability of those ___ ____ __.
Through a simple but very powerful process where the business and the owners of the business are legally separated through a process where the business registers with the state.
In a company, the liability of the company is distinct from the liability of those who run it.
what is the difference between a non profit and a for profit?
name 3
For profits primarily aim to generate financial gain for owners whereas non profits do not
In for profits, profits can be distributed to owners or shareholders. In non profits, any surplus revenue is reinvested back into the organization.
For profits are owned by individuals or shareholders. Non-profits have unclear ownership and control.
1. What is the calculation for profit and what is a profit?
2. What is the calculation for surplus and what is a surplus?
1. Profit is money made from the business.
Profits = total revenues- total costs.
2. A surplus is any extra revenue generated after subtracting an NPO’s costs. A surplus is calculated
Surplus = total revenues- total costs.
Partnerships are safer than sole traders, they tend to be more _____ and have a higher chance of _____. Compared to businesses that operate as _____, partnerships usually have less ____ to loans from banks and other financial institutions.
Partnerships are safer than sole traders, they tend to be more stable and have a higher chance of continuity. Compared to businesses that operate as companies, partnerships usually have less access to loans from banks and other financial institutions.
1. What abbreviations are used to recognize companies?
2. What is the difference between a public or private limited company?
1. INC., LLc
2. A private limited company can only sell shares in the company to people known to the business such as family friends, etc.
A public limited company offers its shares in a public space.