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Forms of Business
JC Business
| Term | Definition |
|---|---|
| Sole Trader | A business owned by one person |
| Benefits of being a Sole Trader | Owner makes all the decisions. Owner keeps all the profit. Easy to set up business |
| Disadvantages of being a sole trader | Owner has unlimited liability. Owner has to have many skills. Owner can become stressed and work long hours because they cannot delegate |
| Unlimited liability | A situation where your personal possessions can be sold to pay for business debts |
| Shareholder | A person who owns part or all of a company. |
| How many shareholders does Private LTD companies have? | Between 1-99 |
| In a LTD company your voting rights depend on..... | the number of shares you own |
| Three documents required to set up a LTD company | Memorandum of Association, Articles of Association, Declaration of Compliance with the Companies Act |
| Memorandum of Association contains: | Name of the company with LTD after the name, Objectives of the business, A statement that the shareholders have limited liability, A statement on the amount of authorised share capital |
| Articles of Association contains: | The name of the company, Voting rights of shareholders, Rules for calling meetings, How directors are to be elected, Borrowing powers of the company |
| The Memorandum, Articles and Declaration are sent to..... | The Companies Registrations Office |
| This organisation issues the Certificate of Incorporation is called... | The Companies Registrations Office |
| The birth cert of the company is called... | The certificate of incorporation |
| Advantages of a Private LTD company are: | Shareholders have limited liability, Easier to raise finance, Generally, better credit rating than sole traders |
| Disadvantages of a Private LTD company are: | More costly to set up, There are more legal requirements, Accounts must be published, Shares cannot be sold to the general public |
| Cooperative | A business set up by a group of people with a common need. It is run by members for the benefit of members |
| Characteristics of Cooperatives | Minimum of seven members, Members buy a share in the coop, Each member has one vote, Members have limited liability |
| Credit Union is an example of... | a cooperative |
| Advantages of Cooperatives | Members have limited liability, One vote per member regardless of their investment, Profits are returned to members based on their shareholding |
| Disadvantages of Cooperatives | May be a lack of incentive to buy shares as all members get equal say, This makes it difficult to raise finance, Coop members may lack business expertise, Coops may be too small to compete with larger companies |
| Reasons for state involvement in business | Too provide essential services, To develop the country’s natural resources, To rescue firms from closing down, The set up costs of the business may be too great for private business, To promote Ireland abroad |
| Examples of state owned business include.... | ESB, An Post, CIE, Bord Failte, Anglo Irish Bank, IDA, Coillte |
| Privatisation | Where a state owned firm is sold to private investors. Eg. Aer Lingus, Eircom |
| Nationalisation | Where a private firm is taken over by the state |
| Advantages of state owned businesses | Provide essential services which would not otherwise be provided, Provide employment which helps the economy, Provide revenue for the government when profitable |
| Disadvantages of state owned businesses | Many state owned business are monopolies. Monopoly businesses often become inefficient, If the business makes a loss the tax payer must pay for it, They depend on the government for money - this create inefficiencies |
Created by:
dkellybusiness
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