200910 Chapter Notes - Chapter 1: A.D. Vision
FINANCINGENTEPRISES
Chapter1Formsofbusinessownership–choosingtherightfit
1.1Definesoletraderandexplainthe6advantagesand6
disadvantagesofthisownershipmodel
1.2Definepartnershipandexplainthe5advantagesand3
disadvantagesofownershipmodel
1.3Definecorporationandexplainthe4advantagesand6
disadvantagesofthisownershipmodel
1.4explaintheconceptofcorporategovernanceandidentifythe3
groupsresponsibleforensuringgoodgovernance
1.5identifypotentialadvantagesofpursuingmergersandacquistions
asagrowthstrategyalongwiththepotentialdifficultiesandrisks
1.6Definestrategicallianceandjointventureandexplainwhya
companywouldchoosetheseoptionsoveramergeroracquisition
1.1SoleTraderbusinessownedbyoneperson(farms,restaurants,online
shops,tradies,contractors,smallservice
businesses)operatedbycaterers,consultantsandfreelancewriters)
fundedbyowner
daytodaymanagementwithsomedelegationresponsibilities
Adv.(SSPFFP)
Dis.FDLRNF
1.SIMPLICITYEASYTO
ESTABLISH
lesspaperworkthanother
structures
lowcosts
needABNregisterforGSTif
annualgstturnover
1.FINANCIALLIABILITYunlimited
liabilitydamages(accidenton
premises,bankrupt)ordebtincurred
byabusinessaretheowners
personalresponsbility
2.SINGLELAYEROFTAXATION
allprofitflowsthroughtothe
ownereverythingtaxedon
2.DEMANDSONOWNERSlong
hours,stressofmakingmajor
decisions
personalincome
lowcosttooperate
Generalpurposebus.Networks
suchasLinkedIn+specialised
(Biznick)
3.PRIVACY
noreportingrequirementsbesidesgov.reports+filingtaxreturns
4.FLEXIBILITYANDCONTROLaren’trequiredtogetapprovalfromyour
boss,boardofdirectors
3.LIMITEDMANAGERIALPERSPECTIVE
soletradersdon’thaveenoughskillsandexpertiseinaccounting,
marketing,ITtorunbusinsess
4.RESOURCELIMITATIONShavefewerfinancialresourcesandfewer
waystoget
TAXATIONhours,stressofmakingmajor
Costsharingpartnersshare
allprofitflowsthroughtotheownereverythingtaxedonpersonal
income
lowcosttooperate