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Total value of capital invested into the business

Labor  intensive method of production? Low output levels and use little capital equipment.

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Often used in retailing business. Especially retailers selling similar products.

Can be used to measure businesses that sell very different products.

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Very common in manufacturing industries

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Easy to calculate and compare with other businesses limitations

Capital intensive firms? Few people are employed. High cost equipment

How do you consider part time employees?

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Try to use many methods, don't stick to just one. No perfect way to compare businesses .This is useful for investors, governments, competitors, and workers.

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Document containing the business objectives and importance details about the operations finance and owners of the new business.  Forces the entrepreneur to think ahead and plan carefully for the first few years. Could include images of prototypes. Shows cash flow, which products, costs, etc

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The risk taker, the one who organizes, operates and takes the risk for a new business venture.  He usually has the idea. Has to go and look for the money to pay for their workers salaries. Creative, Hard working, Optimistic, Self-Confident, Innovative, Independent, Effective.

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Most suitable for very large businesses

They are not owned by the Gov. →Private sector

In UK they use “plc”

Annual General Meeting

Dividends: payments made to shareholders form the profits after tax of a Co. Return to shareholders for investing in the Co.

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Legal formalities involved in the establishing the business

Capital cannot be raised by sales of shares to the general public

Quite difficult for shareholders to sell shares

Companies' accounts must be sent to register. Available for public inspection

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Shareholders have limited liability

Separate legal personality

Continuity in the event of the death of shareholders

Original owner is still often able to retain control

Able to raise capital from sale of shares to family, friends, and employees

Greater status than an unincorporated business.

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Continues it existence after owner's death,

Can make contracts and legal agreements,

Company's account are kept separate from the accounts of the owners

Shares  → shareholders

The directors are the most important shareholders

UK → “Limited”

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-Inneficient
-Govenrments may interfere in businesses decisions for political reasons

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Companies that have separate legal status from their owners.

Continuity

Separate legal identity

Limited liability - respond with the money of the company not personal money.

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The shares cannot be bought and sold

Is a separate legal unit which still exists after a partners death, unlike ordinary partnerships that end with the death of one of the partners

An intermediate pf unicorp. And incorp, because it is like a normal partnership but has the characteristics of an incorp, like continuity, separate legal identity and limited liability.

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-Managed with social objectives rather than profit
-Loss making services keep operating if the social benefit is great enough

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Unlimited liability

Profit shared

Not continuity

Allbound by the decisions of one

Not possible to rise  capital

Lose independence of making decisions

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Specialize in different area

Shared decision

Additional capital (will be able to raise more money when starting up the company)

Business losses shared

Greater privacy and fewer legal formalities

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Group or association of at least two people who agree to own and run a business together.

Partner contribute to the capital of the business and share the profits

Can be set very easily

A partnership agreement is the written and legal agreement between business partners. It is not essential for partners to have such an agreement but it is always recommended.

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- Unlimited liability
- Little opportunity for planning
- Owner is responsible for tax planning
- Lack of continuity, because it doesn't have separate legal status

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- Simple to set up and operate
- Complete control
- Fewer reporting requirements
- Losses may be offset against other income
- Use individual tax file number
- Not an employee of your own business
- Easy to change business structure

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Owned and operated by one person

Few legal requirements to set up

Annual accounts to Go Tax Office- only have to present this once per year

Must comply with safety and health laws (any enterprise )

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A business that does not have a separate legal identity.

No continuity - if the owner of the enterprise dies the enterprise dies with it.

No separate legal identity - the personal belongings and the enterprise are all together;no separation.

No limited liability- if there is a problem you will have to pay with your own money; it is mixed.

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                                     CHAPTER 4

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                                     CHAPTER 4