Types of Businesses - Advantages and Disadvantages

What are the advantages of a Sole Trader? (4)

simple and inexpensive to start, owner has total control of the business, low entry costs and minimal government intervention and regulations, taxed only on income earned not business profit

What are the disadvantages of a Sole Trader? (4)

unlimited liability- owner is responsible for paying all the business debts, if owner dies the business ends, owner needs to be multi-skilled, owner provides capital and works long hours to make the business viable

What are the advantages of a Partnership? (4)

low entry costs ad operating fees, shared decision-making and responsibilities, tax paid only on partners income not business profits, business can continue of a partner dies

What are the disadvantages of a Partnership? (4)

unlimited liability- all partner are responsible for the debts the business incurs, disputes can arise, workload may not be shared equally, relies on partner honesty and loyalty

What are the advantages of Public Companies? (4)

limited liability- seperate entity to the shareholders, potential to expand through the release of further shares on the ASX, continues to operate despite partener death or removal, company tax is lower than personal income tax rates

What are the disadvantages of Public Companies? (3)

costly to set up and run, greater accountability with public disclosure (published annual reports), double tax system- company tax and personal tax paid on shareholder dividends

What are advantages of Private Companies? (4)

limited liability- seperate entity to shareholders, access to more capital with multiple owners, potential for ongoing life with shares transferred to others, pay company tax rates which are lower

What are disadvantages of Private Companies? (4)

high set up costs and complex to establish, potential for disputes, double tax with company and shareholders both paying taxes, problems transferring ownership

What are the advantages of GBE’s? (3)

provides competition to businesses in the private sector, can offer community service that may otherwise not be available, some independence from government scrutiny

What are the disadvantages of GBE’s? (3)

potential for political interference, less accountability could lead to lower productivity, must comply with government rules

What are advantages of Social Enterprise? (3)

can fill a gap or create a new market opportunity, can address a specific social need, provides competition for other businesses

What are disadvantages of Social Enterprise? (3)

high operating costs, hard to focus on both financial and social needs, can be difficult to source money to start the business