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SingaporeBusiness ManagementQuick questions
The Business Environment
Quick questions on Types of business organisation explained: H2 Management of Business
7short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is sole trader?Show answer
One owner who is the business in law - it is unincorporated, so there is no legal separation between owner and business. Easy and cheap to set up, fully controlled by the owner, and private. The fatal drawback is unlimited liability: the owner is personally liable for all business debts, risking personal assets.
What is partnership?Show answer
Two or more owners share capital, skills and workload, typically under a partnership agreement. More capital and expertise than a sole trader, but partners usually have unlimited liability (and are liable for each other's business actions), profits are shared, and disputes can arise. Suits professional practices and small ventures with several founders.
What is private limited company?Show answer
Owned by shareholders whose shares cannot be sold to the general public. Offers limited liability, easier finance than a sole trader, and continuity, while keeping ownership within a controlled group (often family or founders). Costs: filing accounts, legal formalities, some loss of privacy.
What is public limited company?Show answer
Can sell shares to the general public, usually via a stock exchange listing. Can raise very large sums of capital and has high status and liquidity for shareholders. Costs: heavy regulation and disclosure, large flotation costs, loss of control as ownership disperses, the divorce of ownership and control (shareholders own, managers run), and pressure for short-term results.
What is q1?Show answer
State two advantages a sole trader has over a private limited company. [2 marks]
What is q2?Show answer
Explain why a partnership might suit a firm of accountants better than a sole trader structure. [4 marks]
What is q3?Show answer
Analyse the main drawbacks a private company should weigh before deciding to become a public limited company. [6 marks]
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