Term Definition
Sole Trader A business owned by one person
Benefits of being a Sole Trader Owner makes all the decisions. Owner keeps all the profit. Easy to set up business
Disadvantages of being a sole trader Owner has unlimited liability. Owner has to have many skills. Owner can become stressed and work long hours because they cannot delegate
Unlimited liability A situation where your personal possessions can be sold to pay for business debts
Shareholder A person who owns part or all of a company.
How many shareholders does Private LTD companies have? Between 1-99
In a LTD company your voting rights depend on….. the number of shares you own
Three documents required to set up a LTD company Memorandum of Association, Articles of Association, Declaration of Compliance with the Companies Act
Memorandum of Association contains: Name of the company with LTD after the name, Objectives of the business, A statement that the shareholders have limited liability, A statement on the amount of authorised share capital
Articles of Association contains: The name of the company, Voting rights of shareholders, Rules for calling meetings, How directors are to be elected, Borrowing powers of the company
The Memorandum, Articles and Declaration are sent to….. The Companies Registrations Office
This organisation issues the Certificate of Incorporation is called… The Companies Registrations Office
The birth cert of the company is called… The certificate of incorporation
Advantages of a Private LTD company are: Shareholders have limited liability, Easier to raise finance, Generally, better credit rating than sole traders
Disadvantages of a Private LTD company are: More costly to set up, There are more legal requirements, Accounts must be published, Shares cannot be sold to the general public
Cooperative A business set up by a group of people with a common need. It is run by members for the benefit of members
Characteristics of Cooperatives Minimum of seven members, Members buy a share in the coop, Each member has one vote, Members have limited liability
Credit Union is an example of… a cooperative
Advantages of Cooperatives Members have limited liability, One vote per member regardless of their investment, Profits are returned to members based on their shareholding
Disadvantages of Cooperatives May be a lack of incentive to buy shares as all members get equal say, This makes it difficult to raise finance, Coop members may lack business expertise, Coops may be too small to compete with larger companies
Reasons for state involvement in business Too provide essential services, To develop the country’s natural resources, To rescue firms from closing down, The set up costs of the business may be too great for private business, To promote Ireland abroad
Examples of state owned business include…. ESB, An Post, CIE, Bord Failte, Anglo Irish Bank, IDA, Coillte
Privatisation Where a state owned firm is sold to private investors. Eg. Aer Lingus, Eircom
Nationalisation Where a private firm is taken over by the state
Advantages of state owned businesses Provide essential services which would not otherwise be provided, Provide employment which helps the economy, Provide revenue for the government when profitable
Disadvantages of state owned businesses Many state owned business are monopolies. Monopoly businesses often become inefficient, If the business makes a loss the tax payer must pay for it, They depend on the government for money – this create inefficiencies