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Types of Businesses
(6) (Government business enterprise (Advantages (Rely…
Types of Businesses
(6)
Sole Trader
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Advantages
Low-cost startup, complete control, simple form, profit is taxed as personal income, no partner disputes, owners keeps all profits
Disadvantages
Unlimited liability, end of business when owner dies, difficult to operate when sick, burden of management, difficulty in raising finance for expansion
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Social Enterprise
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Advantages
Meeting a social need can encourage community support increasing profit, improved morale within business employees
Disadvantages
Difficult to obtain finance to begin the business, difficult to focus on financial and social objectives
Partnership
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Limited partnership means that more than one partner contribute financailly but take no part int the running of the business, this partner is called a sleeping partner.
Advantages
Less costly to startup than a company, on death the business keeps going, shared responsibility and workload, no tax on business profits only personal income
Disadvantages
Personal unlimited liability, possibility of disputes, liability for all debts including partners, difficulty in finding suitable partner
Company
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Private Limited Company
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Advantages
Limited liability, seperate legal entity, life of company lives longer than directors, company tax rates, easier to attract more capital
Disadvantages
More complex and expensive to establish, more reporting requirements to government, shares not traded freely
Public Listed Company
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Advantages
Limited liability, easier to raise capital by selling more shares, company can live longer than director, company tax rates
Disadvantages
Highly complex and time consuming to establish, high costs in establishment, more accountability and compliance, possible loss of control
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