Flashcards on Forms of Business Ownership
Forms of Business Ownership: A Guide for Students
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Business ownership types
16 cards
Card 1
Question: What is a sole trader?
Answer: A business owned by one person who provides the capital and may run the business personally.
Card 2
Question: How does a sole trader provide capital for the business?
Answer: The owner contributes all the capital using personal money or by borrowing in their personal capacity.
Card 3
Question: Why might someone choose to be a sole trader?
Answer: Because they have capital and a special skill to start the business (often a skill passed down through generations).
Card 4
Question: Is a sole trader a separate legal personality?
Answer: No. A sole trader cannot be registered as a separate legal entity; the owner is the legal person who enters contracts personally.
Card 5
Question: What does it mean that a sole trader has unlimited liability?
Answer: The owner is fully responsible for business debts and could lose personal belongings if the business fails.
Card 6
Question: Who is responsible for paying tax on business profits for unregistered ownership types?
Answer: The owner of the business is responsible for paying tax on the profits.
Card 7
Question: How does individual (personal) tax work in South Africa for owners?
Answer: South Africa uses a progressive tax system for individuals: the more a person earns, the higher the tax rate (maximum 45% in 2020).
Card 8
Question: How does corporate tax differ from individual tax for registered businesses?
Answer: Registered companies pay a proportional tax (28% in 2020) on profits and an additional 20% tax on dividends (2020).
Card 9
Question: What determines whether a business has continuity of existence?
Answer: Continuity exists only if the business is a legal entity separate from the owners (i.e., it is registered); otherwise death or retirement of owners af
Card 10
Question: Who decides about day-to-day management in different ownership types?
Answer: Owners decide whether to manage the business themselves or appoint a manager; in companies, owners (shareholders) usually delegate management to a Boa