Which term describes a business that is owned, controlled and run by one person, who keeps all of the profits and is personally responsible for all of the losses?
Sole trader
Which term describes a business owned by two or more people who share the profits, the losses and the responsibility for running it?
Partnership
What is meant by unlimited liability?
The owners are personally responsible for all of the debts of the business, with no upper limit
What is the name for a business that is legally separate from its owners, can offer shares to friends and family in return for funding, and where the owners are not personally responsible for the debts of the business?
Private limited company (Ltd)
What is meant by a franchisee?
A person who pays a fee and ongoing royalties to trade under the name and brand of an established business
What is meant by limited liability?
The owners can only lose the money that they have invested in the business
In which forms of ownership are the owners personally responsible for all of the debts of the business?
Sole trader and partnership
Which term describes the money paid to shareholders out of a limited company's profits?
A dividend
Priya has very little money and wants to start trading as quickly as possible. Which form of ownership is most suitable?
Sole trader
Marco's sole trader business closes owing money to suppliers. What is Marco responsible for?
All of the debts, which he may have to pay from his own savings
A private limited company is legally separate from its owners. What does this mean for the owners?
Their personal assets are protected if the company cannot pay its debts
How does a limited liability partnership differ from an ordinary partnership?
Each partner is only liable for the amount they personally invested
Which term describes the established business that grants a start-up the right to trade under its brand name?
A franchisor
Which of these is a disadvantage for the franchisee of operating as a franchise?
Royalties must be paid to the franchisor based on revenue
Why might decisions take longer to make in a partnership than in a sole trader enterprise?
All of the partners must be consulted before decisions are made
Which is an advantage of setting up an enterprise as a partnership rather than as a sole trader?
The workload and responsibility can be shared between the owners
How is profit usually distributed to the owners of a private limited company?
Shareholders receive a dividend based on the number of shares they own
Which is a disadvantage for the owners of trading as a private limited company?
The company accounts must be made available for the public to see
Why might a new entrepreneur decide to buy a franchise instead of setting up an independent business?
Customers already know the brand and the business systems are established
Rob runs a franchise of a pizza brand. Which decision is likely to be made by the franchisor rather than by Rob?
Which suppliers the business must buy its ingredients from
Amir is a sole trader plumber. He breaks his arm and cannot work for three months. Which disadvantage does this show?
There is no one else to run the business or cover his work
Ellie and Sam set up a partnership and agree a 60:40 split of any profits. What does this show about how partnerships distribute profit?
The profits are divided according to the share split the partners agreed
A sole trader needs more money to expand the enterprise. Why might becoming a private limited company (Ltd) help?
The company can sell shares to friends and family to raise finance
Kasia runs a cake decorating enterprise on her own. Which is an advantage of being a sole trader rather than taking on a partner?
She keeps all of the profit and makes all of the decisions herself
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