Flashcards on Forms of Business Ownership and Sole Proprietorship
Forms of Business Ownership & Sole Proprietorship Explained
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Business Ownership Forms
16 cards
Card 1
Question: What is an entrepreneur as described in the content?
Answer: A person who kick-starts a business into action; starting a business involves more than just an idea and selling—it must operate within a legal framew
Card 2
Question: What is meant by 'legal persona' or 'legal personality' of a business?
Answer: The legal right of a business to enter into contracts, own property, and sue or be sued; requires registration so the business is separate from its ow
Card 3
Question: Why does registration of a business matter for legal persona?
Answer: Registration gives the business a separate legal personality so the legal rights and obligations of the owner and the business are kept separate.
Card 4
Question: According to the content, what are the main forms of ownership discussed?
Answer: Sole trader/sole proprietorship and partnership (companies are mentioned but covered later).
Card 5
Question: In the context of liability, who can have limited or unlimited liability?
Answer: The owner(s) have limited or unlimited liability—not the business itself.
Card 6
Question: What is the consequence of an owner having unlimited liability?
Answer: The owner could lose personal belongings if the business cannot settle its debts.
Card 7
Question: What does limited liability protect an owner from?
Answer: It protects the owner's personal belongings from being used to cover the business's debts if business assets are insufficient.
Card 8
Question: Who is responsible for paying tax on a business's profits in the described system?
Answer: The owner of the business is responsible to pay tax on the profits.
Card 9
Question: How does the content describe personal (individual) tax compared to company tax (2020 figures)?
Answer: Individual tax is progressive up to 45% (2020); registered companies pay proportional tax of 25% on profits plus 20% tax on dividends (2020).
Card 10
Question: What is meant by 'continuity' of a business in this content?
Answer: Continuity means the business's existence is separate from its owners—death or retirement of owners does not affect the business if it is a registered