Types of business ownership: Practice Questions

Which of the following is a characteristic of a co-operative that distinguishes it from a traditional private limited company?

A private limited company (Ltd) wishes to expand significantly and decides to convert into a public limited company (PLC). What is a major disadvantage of this change in business ownership?

A technology startup is evaluating its business structure. The founders want to raise large amounts of capital from the general public while providing themselves with protection from personal liability for business debts.
Which legal structure would be most appropriate for this goal?

Which of the following is a primary characteristic of a sole trader business ownership type?

An entrepreneur is deciding between operating as a sole trader or forming a private limited company (Ltd). Which of the following best explains the impact of unlimited liability if the entrepreneur chooses to remain a sole trader?

A sole trader has been operating a successful retail shop but is now concerned about unlimited liability.
Identify one primary benefit of converting the business into a private limited company (Ltd) regarding the owner's personal assets.

A co-operative and a private limited company (Ltd) both generate an annual profit of \(\$50,000\).
Explain how the distribution of profits typically differs between these two types of ownership in terms of who receives the financial benefits.

A small group of freelance graphic designers currently operating as sole traders is considering forming a co-operative to share costs and improve their market presence.

a) Define what is meant by a co-operative business ownership structure. (2 points)
b) Explain two potential advantages for these designers of changing their business type from individual sole traders to a co-operative. (2 points)