Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 3 views

    Sec1 Part 8

    Uploaded by

    emonimtiaz
    Business Studies Note on Sec 1 part 8

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Sec1 Part 8

    Uploaded by

    emonimtiaz
    3 views2 pages
    Business Studies Note on Sec 1 part 8

    Original Title

    Sec1 part 8

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Business Studies Note on Sec 1 part 8

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    3 views2 pages

    Sec1 Part 8

    Uploaded by

    emonimtiaz
    Business Studies Note on Sec 1 part 8

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 2

    Section 1: Understanding Business Activity0

    Chapter 4 : PART – 8
    ❖ Partnerships Business:
    ▪ A business in which 2 to 20 people agree to own it.
    ▪ Usually small businesses but bigger than sole traders.
    ▪ Useful for people who want to form a business but don’t want the legal complications
    ▪ Industries such as medicine or law where you are not allowed to form a company
    ▪ Partners that know each other very well
    ▪ Requires a Partnership Agreement

    ❖ Contents of Partnership Agreement:


    • Amount of capital invested by all partners
    • Tasks to be done by each partner
    • The way profits are shared out
    • How long partnership will last
    • Arrangements for absence, retirement and how partners could be let known

    ❖ Private Limited Company (LTD):


    ➢ An LTD is different from the other because it can sell shares and it is an incorporated business.
    ➢ Company must be owned by at least 2 shareholders
    • A shareholder buys shares of an LTD company which represent part ownership of the company
    • Dividend is the amount of profit each shareholder gets
    ➢ Shares are sold privately to friends and family
    ➢ Has separate identity from owners, incorporated, so company accounts are separate from the owners’
    ➢ Must have: Articles of Association and Memorandum of Association

    ❖ Article of Association – must contain the RULES in which the company will be managed. Contains:
    • Rules for shareholder meetings
    • List of directors and their jobs
    • Voting rights of shareholders
    • Details of how accounts are recorded

    ❖ Memorandum of Association – must contain important information about the company:


    • Company name, address
    • What the business does
    • Number of shares to be sold
    ❖ Risk, Ownership & Limited Liability:
    ➢ Risk: the uncertainty of profits or danger of loss, events that could cause business to fail
    ➢ Ownership: who owns the business (partnership =partners, LTDs and PLCs = the shareholders).The people with risk are usually the
    owners
    ➢ Liability: how much the shareholders of a company are liable for the debts in the business
    ▪ Limited Liability – liability of shareholders is limited to the amount of money they invested (PLC & LTD)
    ▪ Unlimited liability – owners of business are held responsible for all the debts of the business (not just their investment) (Sole
    trader & partnerships)

    ❖ Private Limited Companies (LTD) are useful for family businesses or businesses/partnerships where owners want to expand more (as you
    can sell shares). Public Limited Company (PLC) is similar to LTD only the shares can be sold to the public. It is the biggest type of business.
    Shareholders of PLCs may attend an Annual General Meeting where they may vote for the board directors

    ❖ Franchise: A business based upon the use of the brand-names, promotional logos & trading methods of an existing business.
    ▪ The franchisor is the main business/brand; The franchisee is the individual to start up franchise
    ▪ In a franchise, the franchisor allows the franchisee to trade under its name and see its products for a fee
    ▪ The franchisee pays an original fee to franchisor and a percentage of its profit for the privilege
    ▪ Franchisor provides support, such as:
     Advertising
     Legal advice
     Employee training
     Financial advice
    ▪ Franchise agreements last 5 – 20 years, if franchisee cancels the agreement early there may be large fines
    ▪
    ❖ Joint Venture: A joint venture is when two or more businesses start a project together sharing capital risks, and profits

    You might also like