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BUSINESS MANAGEMENT - TYPES OF BUSINESSES (Government Business Enterprise,…
BUSINESS MANAGEMENT - TYPES OF BUSINESSES
Government Business Enterprise
Features
Partly/owned by the commonwealth
Aims to make a profit and fulfill a community need
Advantages
A GBE is able to carry out government policies delivering community services in areas where private businesses might hesitate to invest
Can operate with some Independence from the government
Healthy competition with private sector, leading to lower consumer costs
Disadvantages
Possible political interference with day to day operations
Insufficiencies caused by harsh government regulations
Management style can be less effective than private companies
There can be less accountability and possibly less productivity
Examples
Australian Postal Service
Defense Housing Australia
NBN Co limited
Vic Roads (state)
Private Limited Company
Advantages
Easier to attract finance
Limited liability - separate legal entity
Easy transfer of ownership
long life - the company can continue with the death/injury of anyone involved
Experienced management through board of directors
Greater spread of risk
Company tax is lower than personal tax
Growth potential
Con have one shareholder and one director
Disadvantages
Cost of formation
The company is taxed on any profits and dividends, and the income from the company to the shareholder is taxed as personal income
Personal liability for business debt, if director knew that debt could no be paid
Required to produce an annual report of audited accounts
Rapid growth may lead to inefficiencies
Features
Separate legal entity
Complex business structure
Higher costs
Abide by Corporations Act 2001
Must be registered for GST
Company owns profits
Annual company tax return
Examples
Visy industries
Handcock prospecting
Linfox
The Good Guys
Sole trader
Advantages
Low cost of entry
simplest form of business
Complete owner control
Less costly to operate
No partnership disputes
owner can keep all profits
less government regulations
profit is taxed as person income
Disadvantages
Personal unlimited liability for business debt
End of business when owner dies
Difficult to operate if sick
Owner needs to carry all losses
Burden of management
Difficult to raise finances for expansion
Features
Simple to operate
owner has full conrtol
low cost structure
unlimited liability - personal risk
Examples
Local Newsagent
Brian's electricians
Mandy's Hairdressing
local cafe
Public Listed Company
Advantages
Easier to attract finance
Limited liability - separate legal entity
Easy transfer of ownership
Long life - the company can continue with the death/injury of any party involved
Experienced management through board of directors
Greater spread of risk
Company tax is lower than personal tax
Growth potential
Can have on shareholder and one director
Disadvantages
Cost of formation
The company is taxed on any profits and dividends, and the income from the company to the shareholder is taxed as personal income
Personal liability for business debts, if the director knew that the debt could not be paid
Required to produce an annual report of audited accounts
Public disclosure - reporting of certain information
Rapid growth may lead to insufficiencies
Features
Separate legal entity
Limited liability
Comply with Corporation Act 2001
Company owns profits
Annual Company tax return
Examples
Telstra
Woolworths
Westpac
BHP
Social Enterprise
Advantages
Can open up new markets - may meet community need that is not necessarily financially preferable
Meeting a social need can have a positive effect of profit and market share
Disadvantages
Difficult to obtain Capital to start the business
Significant operating costs
Can be difficult to focus on both social and financial objectives
Features
Operates for community benefit
Trade to fulfill a mission
Large social financial contribution
Incorporated
Examples
The Big Issue
The Smith Family
Green Collect
Good cycle
Partnership
Features
Separate tax file number
Easy an inexpensive
Unlimited liability
Responsible for superannuation
Advantages
Low start up costs
Less costly to operate than a company
shared responsibility and workload
pooled funds and talent
Minimal government regulations
No taxes on business profits, only on personal income
On death of one partner, the business can keep operating
Disadvantages
Personal unlimited liability
Liability for all debt, including partners debts before the business has begun
Possibility of disputes
Difficult to find a suitable partner
Divided loyalty and authority
Examples
Jane and Lisa's
Tom and Dick's Boat Mechanics
Thankyou
Lunn & sons Accounting