Download Selecting the appropriate structure

Selecting the appropriate structure
1. Select the most appropriate word from the list below to complete the sentences that follow.
A business entity with one owner is called an incorporation.
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This person faces unlimited liability, which means he or she can be forced to sell his or her
personal assets to pay for the debts of the business. Partnerships normally consists of
between two and 20 partners. Partnerships have unlimited liability. There are two types of
companies, private and public. A private company has fewer than 50 private shareholders.
Shares in public companies are bought and sold on the stock exchange. Companies have
limited liability; have gone through the process of incorporation.
Explain the difference between debt and equity finance.
Debt is when a certain amount of money is due to a bank for example, equity on the other
hand is the value of shares issued by a company.
What are the advantages of debt finance?
The owner doesn’t have to sell any ownership in the business.
In your notebook, complete this table to show how each of the businesses in the box below is
owned. The first one has been completed for you.
Sole Trading: Tom Wilson plumbing
Partnership: M&M Communications, Tyler and Kelly
Private Company: Beck’s PTY LTD, Tip Top PTY LTD
Public Company: CGM LTD
Decide what form of business ownership is appropriate for:
a) a small bicycle shop that offers personal and professional advice by the owner
Private Company
b) a national retail chain that would require $589 million to establish
Public company
c) a suburban hairdresser
Sole trader
d) a medical clinic.
Partership.