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Need Prelim (year 11) Notes (1 Viewer)
- Thread starter OzE Hindu
- Start date
losty
Member
- Joined
- Mar 29, 2003
- Messages
- 76
with business i didnt write notes for the half yearly i read and highlighted the text book to learn the content and then my "notes" were all the headings so that i know what comes under what... makes life much easier... that way once u know the actual info you just look over all the headings and whats under the headings and explain it to yourself in your head over and over
jenster
Member
Types of Business Entities
SOLE TRADER
Characteristics:
Owned and operated by one person
Owner provides finance and makes all decisions and takes all responsibility
Owner and business are not a separate entity
Advantages:
Low cost of entry
Simplest form
Complete control
Less costly to operate
Partner disputes do not occur
Profits belong to owner
Less government regulations
No tax on profits, only on personal income
Disadvantages:
Personal (unlimited) liability for business debts
Business dies when owner dies
Difficult to operate when sick
Must carry all losses
Burden of management
Must perform wide variety of tasks
Difficulty in raising finance for expansion
not a separate entity, so if business is sued, owner is sued
if financial difficulties occur the owner is responsible.
Liability: unlimited
Number of owners: 1
PARTNERSHIP
Characteristics:
Owned and operated by 2-20 people
Medical practitioners and stockbrokers are allowed up to 50 partners
Veterinarians, architects and chemists are allowed up to 100 partners
Solicitors and accountants are allowed up to 400 partners
Owners and business not a separate entity
Made in verbal or written implication
Advantages:
Low start-up costs
Less costly to operate than a company
Share responsibility and workload
Pool funds and talent
Minimum government regulation
No taxes on business profits, only on personal income
On death of one partner business can keep going
Disadvantages:
Personal unlimited liability
Liable for all debts, including partners debts, even before the partnership begun
Possibility of disputes
Difficulty in finding a suitable partner
Divided royalty and authority
Liability: unlimited
Number of owners: 2-20
TYPES OF COMPANIES
LIMITED LIABILITY
Characteristics:
The most money a shareholder can lose is the amount they paid for their shares. Eg. If company goes into liquidation, the shareholders cannot be forced to sell their personal assets to pay for the debts of the business.
Advantages:
Easier to attract public finance
Limited liability separate legal entity
Can transfer ownership easily
Enjoys a long life perpetual succession
Experience managers board of directors
Greater spread of risk
Company tax rate lower than personal income tax rate
Growth potential
Recent legislation allows a company to have only one shareholder and one director.
Disadvantages:
Costs of formation
Double taxation company and personal
Personal liability for business debts if directors knew at the time the business was unable to pay loans
Must publish a yearly annual report of audited accounts
Public disclosure reporting of certain information
Becomes too large resulting in inefficiencies
Liability: Limited
Number of owners:
PROPRIETARY (PRIVATE) COMPANIES
Usually has 2-50 private shareholders
Tend to be small to medium-sized, often family-owned businesses
Not listed on the stock exchange
Shareholders have limited liability protection
Shares are only offered to people the business wishes to have as part-owners
Shareholders can only sell their shares to people approved by the other directors.
Must have Pty Ltd. after its name
PUBLIC COMPANIES
Shares are listed on the stock exchange
General public can buy and sell their shares
Tend to be large in size and market a large range of products
Has a minimum of 5 shareholders, with no maximum number
Has no restrictions on the transfer of shares or raising money from the public by offering shares
Has to issue a prospectus when selling their shares for the first time
Has a minimum requirement of 3 directors (2 must live in Australia)
Has Ltd. after its name
Has to publish their audited financial accounts each year, their Annual Report
COOPERATIVES
A group of people who join for a particular purpose such as:
To purchase their own produce a farmers cooperative
To participate in educational courses a community educational center
To obtain loans permanent building societies and credit unions
TRUSTS
A relationship in which one person (the trustee) holds property (the trust property) on behalf of another (the beneficiary)
Main aim is to avoid taxes and preserve family assets
Not a separate legal entity
A commercial or trading trust normally has a limited liability cimpany appointed as the trustee to manage the assets of a business for and behalf of the beneficiaries.
The trustee cannot be held personally liable for the debts of the business because of its limited liability status.
FRANCHISING
Characteristics:
Is a license to operate an individually owned business as if it were part of a chain of outlets or stores.
Examples include McDonalds, 7 Eleven, Dymocks Bookstores etc.
Franchisor:
An individual or organisation granting a franchise
Provides a known and advertised business name
Provides the required training and staff development
Provides a method of doing business
Provides management skills and materials
Franchisee:
person or organisation purchasing the franchise.
Supplies the start-up money
Supplies labour
Operates the franchise business
Agrees to abide by the terms and conditions of the franchise agreement
Most franchise operate their own business, either as a sole trader or a partnership.
Advantages:
Franchisor
Fast and selective product distribution
Avoids costs of construction
Does not have to operate outlets
Agreement ensures some control
Motivated franchisees
Franchisee
Opportunity to start with limited finances
Guaranteed customer base
Established name
Management back-up
Proven methods of business
Disadvantages:
Franchisor
Unsuitable franchise
Disagreement over conditions and terms of contract
Franchisee
Franchisor retains great deal of control
Limited scope for individuality in business operations
Disagreements over conditions and terms of contract
It too successful, franchisor may open own outlet
SOLE TRADER
Characteristics:
Owned and operated by one person
Owner provides finance and makes all decisions and takes all responsibility
Owner and business are not a separate entity
Advantages:
Low cost of entry
Simplest form
Complete control
Less costly to operate
Partner disputes do not occur
Profits belong to owner
Less government regulations
No tax on profits, only on personal income
Disadvantages:
Personal (unlimited) liability for business debts
Business dies when owner dies
Difficult to operate when sick
Must carry all losses
Burden of management
Must perform wide variety of tasks
Difficulty in raising finance for expansion
not a separate entity, so if business is sued, owner is sued
if financial difficulties occur the owner is responsible.
Liability: unlimited
Number of owners: 1
PARTNERSHIP
Characteristics:
Owned and operated by 2-20 people
Medical practitioners and stockbrokers are allowed up to 50 partners
Veterinarians, architects and chemists are allowed up to 100 partners
Solicitors and accountants are allowed up to 400 partners
Owners and business not a separate entity
Made in verbal or written implication
Advantages:
Low start-up costs
Less costly to operate than a company
Share responsibility and workload
Pool funds and talent
Minimum government regulation
No taxes on business profits, only on personal income
On death of one partner business can keep going
Disadvantages:
Personal unlimited liability
Liable for all debts, including partners debts, even before the partnership begun
Possibility of disputes
Difficulty in finding a suitable partner
Divided royalty and authority
Liability: unlimited
Number of owners: 2-20
TYPES OF COMPANIES
LIMITED LIABILITY
Characteristics:
The most money a shareholder can lose is the amount they paid for their shares. Eg. If company goes into liquidation, the shareholders cannot be forced to sell their personal assets to pay for the debts of the business.
Advantages:
Easier to attract public finance
Limited liability separate legal entity
Can transfer ownership easily
Enjoys a long life perpetual succession
Experience managers board of directors
Greater spread of risk
Company tax rate lower than personal income tax rate
Growth potential
Recent legislation allows a company to have only one shareholder and one director.
Disadvantages:
Costs of formation
Double taxation company and personal
Personal liability for business debts if directors knew at the time the business was unable to pay loans
Must publish a yearly annual report of audited accounts
Public disclosure reporting of certain information
Becomes too large resulting in inefficiencies
Liability: Limited
Number of owners:
PROPRIETARY (PRIVATE) COMPANIES
Usually has 2-50 private shareholders
Tend to be small to medium-sized, often family-owned businesses
Not listed on the stock exchange
Shareholders have limited liability protection
Shares are only offered to people the business wishes to have as part-owners
Shareholders can only sell their shares to people approved by the other directors.
Must have Pty Ltd. after its name
PUBLIC COMPANIES
Shares are listed on the stock exchange
General public can buy and sell their shares
Tend to be large in size and market a large range of products
Has a minimum of 5 shareholders, with no maximum number
Has no restrictions on the transfer of shares or raising money from the public by offering shares
Has to issue a prospectus when selling their shares for the first time
Has a minimum requirement of 3 directors (2 must live in Australia)
Has Ltd. after its name
Has to publish their audited financial accounts each year, their Annual Report
COOPERATIVES
A group of people who join for a particular purpose such as:
To purchase their own produce a farmers cooperative
To participate in educational courses a community educational center
To obtain loans permanent building societies and credit unions
TRUSTS
A relationship in which one person (the trustee) holds property (the trust property) on behalf of another (the beneficiary)
Main aim is to avoid taxes and preserve family assets
Not a separate legal entity
A commercial or trading trust normally has a limited liability cimpany appointed as the trustee to manage the assets of a business for and behalf of the beneficiaries.
The trustee cannot be held personally liable for the debts of the business because of its limited liability status.
FRANCHISING
Characteristics:
Is a license to operate an individually owned business as if it were part of a chain of outlets or stores.
Examples include McDonalds, 7 Eleven, Dymocks Bookstores etc.
Franchisor:
An individual or organisation granting a franchise
Provides a known and advertised business name
Provides the required training and staff development
Provides a method of doing business
Provides management skills and materials
Franchisee:
person or organisation purchasing the franchise.
Supplies the start-up money
Supplies labour
Operates the franchise business
Agrees to abide by the terms and conditions of the franchise agreement
Most franchise operate their own business, either as a sole trader or a partnership.
Advantages:
Franchisor
Fast and selective product distribution
Avoids costs of construction
Does not have to operate outlets
Agreement ensures some control
Motivated franchisees
Franchisee
Opportunity to start with limited finances
Guaranteed customer base
Established name
Management back-up
Proven methods of business
Disadvantages:
Franchisor
Unsuitable franchise
Disagreement over conditions and terms of contract
Franchisee
Franchisor retains great deal of control
Limited scope for individuality in business operations
Disagreements over conditions and terms of contract
It too successful, franchisor may open own outlet