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Worksheets1.4.1 - Options for start-up and small businesses
Total questions: 13
Worksheet time: 7mins
Which of the following best describes the term limited liability? If the business fails:
Personal possessions of the owner can be taken to pay any debts
The owner is personally liable for all the debts of the business
There is no limit on the amount the owner has to pay to settle debts
The owner only loses the amount invested in the business
Five people have come together to start a business which has unlimited liability. Which type of business ownership have the entrepreneurs decided for their start-up?
Sole trader
Partnership
Private limited company
Public limited company
An individual wants a quick, easy and inexpensive way to start-up a small business. In this situation, which of the following types of organisation should the individual select for his start-up?
Sole trader
Partnership
Private limited company
Franchise
Which of the following is an advantage of operating a business as a private limited company?
It is easier to raise finance as the business can sell shares
Owners have unlimited liability
Partners can provide specialist knowledge and skills
It is very quick and easy to set up
The agreement for one business to trade under another business’ name is called a:
Sole trader
Partnership
Private limited company
Franchise
A business has decided to expand in the UK through opening two new franchises. The forecast revenue over the next 3 years per franchise is shown in the table below.
The franchisee will pay a royalty of 8%. How much will the franchisor receive in total in royalties in the next 3 years?
£3,600
£17,600
£35,200
£220,000
Which of the following is always considered a disadvantage of setting up a business as a partnership in comparison to starting up as a sole trader?
Shared losses
Shared workload
Shared profit
Shared responsibility
Which of the following organisations is most likely to sell shares for sale to invited investors?
Sole trader
Partnership
Private limited company
A business with unlimited liability
The most likely reason for a sole trader to change into a private limited company is because it wants:
To share its financial accounts with the public
To raise additional finance
To benefit from unlimited liability
To avoid business continuity
Which of the following is a disadvantage of being a private limited company?
It has a separate legal identity and therefore has continuity
Control is kept over who buys shares in the company
Shareholders’ personal possessions cannot be taken to pay any debts
A summary of the business’s accounts can be viewed by the public
Which of the following is an advantage to a business of operating as a partnership rather than a sole trader?
Unlimited liability
Decision making is faster and easier
Liability is split
Financial accounts are kept private
Which two of the following statements are always true of a sole trader?
Select two answers:
The owner has day to day control of the business
Liability is limited
Losses will be shared between partners
Shareholders own the business
Liability is unlimited
Which two of the following are advantages of starting up and running as a franchise operation?
Select two answers:
The franchisee:
Has to provide all equipment such as IT systems
Gets advice and training from the franchisor
Has to pay royalties to the franchisor
May have to buy goods from the franchisor at a mark-up
Is part of a well-known firm with established brand name and product
