aos 1

Types of businesses

Sole tralder- is a business where one person owns and runs the business.

He provides all the finance
Makes all the decisions
Takes all responsibility

Advantages	Disadvantages
Low cost of entry	No one to discuss if you encounter problems
Full control and power over business	End of business if owner dies
Less costly to operate	Difficult to operate if sick
Can keep all profits	Carry all losses
No partner disputes	Personal unlimited lability for business. [debts]
Own boss	When the owner is personally responsible for all the debts of the business. Owner is tied to business
	Has to juggle multiple roles

Partnership- agreement between 2 or more individuals. [max of 20] to carry on a business as owners.

Distribute profit
Usually have partnership agreement

Advantages	Disadvantages
Easy and simple to register	Personal unlimited lability
Less costly to operate	Partners and business itself are a single legal entity
Pooled funds and talents	Conflicts may arise
Less government regulations	Hard to find suitable partner
No tax on business	Divided authority and loyalty
Can cover for partner if needed

Silent partner- add more capital but is not involved in running the business.

. Private and public companies

How do shares work in private companies?

Incorporation- process businesses goes through to become a registered compony and separate legal entity from owner/shareholder

Owners are called shareholders.

Limited lability- shareholders are only liable to the extent of their original investment, meaning that they are not personally liable for company's debts.

Just lose what they invested.

Diffrnce between private and public- their shares.

Pivate LC- incorporated business that has minimum of 1 shareholder and a maximum of 50 non-employee shareholders.

Shares are owned and traded by few private investors
Shares are offered to people who are deemed fit
Can not sell shares unless approved
Shareholders expect a return on their investment- [the value of the shares to increase]
Not listed on stock exchange

Advantages of a Private Company

Greater control – Owners keep full control of decision-making (no public shareholders).

Privacy – Financial reports do not have to be publicly disclosed.

Lower costs – No expensive listing fees or strict regulations like public companies.

Disadvantages of a Private Company

Limited access to capital – Cannot sell shares to the general public, so raising large amounts of money is harder.

Limited growth opportunities – Expansion can be slower due to fewer financial resources.

Less brand recognition – Public companies often have more publicity and credibility.

Public listed compony- incorporated business with a minimum of one shareholder and no maximum and whose shares are openly traded on the Australian securities exchange.

Public can buy and sell shares to each other
No restrictions on transfer
Minimum requirement of 3 directors

advantages	Disadvantages
Easier to attract finance	Cost of formation- more expensive and requires more time
Limited lability- separate legal entity	Double taxation- compony and personal
Easy transfer of ownership	Personal lability for business debts if directors knew at the time that the business could not pay loans
Long life of business, despite death	Complex reporting requirements- must publish annual reports
Experienced managers	Public disclosure of certain information
Greater spread of risk
Growth and potential

Differences between PUBLIC and PRIVATE

Can attract extra capital by issuing shares on the share market- greater potential for growth
Required to abide by stringent compliances
Highly complex business structure

Diffrance between sole traders and partaships and companies

Sole traders and partnership	Companies
Fund every thing	Obtain by funding shares
Unlimited lability	Limited lability
Run Soley or through partnership	Run by directors

Social enterprises- business that provides goods and services for the market, but operates with the primary objective of fulfilling a community or environmental need.

e.g. reducing poverty, providing employment.
Majority of profits are reinvested back into business to benefit society
Must be at least 50% of their profits towards their social enterprise

Advantages	Disadvantages
Open up new markets-	Difficult in obtaining capital
Metting social need- having a positive effect	Significant operating costs, doing things most business won't do - e.g hiring a person with less expirance
Develop a positive reputation	Difficult to focus on both social and financial objectives
Employees have purposeful work

Differences Between private company and social enterprise.

Similarities (Both)	Differences
1. Both sell goods and/or services.	Private company: Main aim is to maximise profit for owners. Social enterprise: Main aim is to achieve a social or community objective.
2. Both aim to generate revenue to cover costs and survive.	Private company: Profits are distributed to owners/shareholders. Social enterprise: Profits are mainly reinvested into the social mission.
3. Both require management of staff, finances and operations.	Private company: Success is measured mainly by financial performance. Social enterprise: Success is measured by social impact as well as financial sustainability.

Government buisness enterprise GBE- government owned and operated business

Goal of making profit- just like componies-increase the value of their assets and return to their shareholder

Carry out government policies while they deliver community seriveses e.g transport, housing, comunication.

ad	dis
Delivering servises to areas whre private buisness may hesitate to invest	Political interfernance in oporations- change stratigic direction
Healthy compotion to private buisness- may led to lower prices in markets	management of GBEs can be less effective than that of the private sector
Can rely on government for initial invenstment