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Forms of Business_RC

Forms of Business for JC Business

QuestionAnswer
Explain the term 'public sector' Public sector = forms of business owned by the state (government). Main aim is to provide essential services. E.g. ESB.
Explain the term 'private sector' Private sector = forms of business owned by individual or groups. Main aim is to make profit. E.g. Supermacs.
Name 4 forms of business in the private sector 1. Sole Trader e.g. Local butcher 2. Franchise e.g. McDonalds 3. Co-operative e.g. Credit Union, Arrawbawn co-op 4. Private Limited Company (LTD) e.g.Dunnes Stores LTD
Explain the term 'Limited Liability' The owner of the business is totally liable for all the losses and risks involved. i.e. If they cannot pay their debts then they may lose savings and personal assets (e.g. Car) to cover losses
Explain the term 'Unlimited Liability' The owner has limited liability for the risks involved. They can only lose the money they invested in the business and there personal assets CANNOT be touched.
Outline the term 'Sole Trader' A small business that is usually operated, owned and controlled by one person. E.g. farmer. Advantages= 1. Owner keeps all profits 2. Easy to set up. Disadvantage = Unlimited liability
Explain what a 'Co-operative' is Where a group of people with a common objective get together and form a business. E.g. Credit Union. Owners paid dividends from profits. Each member has one vote at AGM.
Explain the term 'Franchise' : A franchise is where you buy a license to produce a particular good or service. E.g. Supermacs. Advantages = 1. Instant brand recognition. 2. Limited Liability. Disadvantages = 1. Expensive to set up 2. Franchiser takes cut of profits.
What is a Private Limited Company? A company with the letters ‘Ltd.’ after its name. Formed with 2 - 50 shareholders. Controlled by Board of Directors elected at AGM. Each share gets one vote at AGM. Owners have limited liability.
Outline how a 'Private Limited Company' is formed 1. You must have between 2 - 50 shareholders. 2. Complete Memorandum and Articles of Association, Declaration of Compliance with Companies Act, Statement of Capital. Send to Registrar of Companies. 3. You will receive a Certificate of Incorporation.
What is the 'Articles of Association'? This shows the relationship between your company and the outside world. It contains name and address of company and company objectives.
What is the 'Memorandum of Association'? This shows the relationship between the Shareholders and the Company. It contains the rules for the running of the company e.g. Frequency of shareholder meetings and details of voting at meetings.
Explain the term 'Certificate of Incorporation' This is the 'birth cert' of a company sent by the Companies Registration office to the company. Give a company separate legal identity and limited liability.
Why do companies have a 'Business Plan'? 1. Necessary when looking for capital/loans. 2. Identifies strengths, weaknessses and opportunities for a company. 3. Provides a roadmap (guideline) for a company.
Name 4 headings that should be in a 'Business Plan' 1. Management 2. Marketing 3. Finance 4. Product
What is a 'Cash Flow Forecast'? An estimate (plan) of income and expenditure over a future period.
Explain the term 'internal source of finance' Finance sourced from inside the company.
Explain the term 'external source of finance' Finance sourced from outside the company.
Give two examples of 'Internal finance' 1. Capital = money invested by shareholders 2. Retained profit = profits ploughed back into the business.
Give four examples of 'External finance' 1. Long term loan 2. Government grant 3. Leasing 4. Bank Overdraft 5. Hire purchase
Created by: dqualter