Question 1: Define what is meant by a sole trader business. Include two key features in your answer.

Answer: A sole trader is a business owned and operated by one individual. Key features include full control by the owner and unlimited liability for the business’s debts.

Question 2: List three advantages of setting up a partnership instead of operating as a sole trader.

Answer: Advantages include shared responsibility and decision-making, pooled financial resources, and a wider range of skills and expertise.

Question 3: Describe what a private limited company (Ltd) is and explain one benefit of this ownership type.

Answer: A private limited company is a business owned by shareholders with limited liability, and its shares are not available to the general public. One benefit is that owners' personal assets are protected from business debts.

Question 4: Identify two disadvantages of operating a business as a public limited company (PLC).

Answer: Disadvantages include increased regulatory requirements and higher costs of compliance, as well as greater public scrutiny and loss of control for owners.

Question 5: Explain the concept of unlimited liability and identify which types of ownership this applies to.

Answer: Unlimited liability means the owner is personally responsible for all the debts of the business. This applies to sole traders and partnerships.

Question 6: Compare the ownership structure of a franchise business to that of a sole trader.

Answer: A franchise is a business where an individual (franchisee) operates under the branding and system of a larger company (franchisor), often paying fees. A sole trader is independently owned and operated by one individual without external branding restrictions.

Question 7: Sketch a simple diagram showing the ownership structure of a partnership. Label the partners and the central business entity.

Answer: A diagram with three or more circles or boxes labeled 'Partner 1', 'Partner 2', 'Partner 3', all connected to a central box labeled 'Partnership Business'.

Question 8: Describe two responsibilities of a sole trader in running their business.

Answer: A sole trader is responsible for making all business decisions and handling all financial obligations, including taxes and debts.

Question 9: Explain why a limited company might choose to go public and become a PLC.

Answer: A limited company might go public to raise large amounts of capital by selling shares to the public, which can support expansion and growth.