Economic Concepts: Profit and Income
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Economic Concepts: Profit and Income

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Questions and Answers

What are three important factors influencing the choice of legal structure for a business?

Size of business, Ownership, Finances

Why might a micro or small business consider using a sole trader or partnership as its legal structure?

It is less expensive to set up.

What legal structure might be more appropriate for a business entering a growth stage and needing an injection of money?

Partnership or private company

At what stage of growth might a business consider changing its legal structure to a public company?

<p>Large national or multinational corporation</p> Signup and view all the answers

Why might a business owner choose a sole trader as the legal structure?

<p>To have complete control and ownership</p> Signup and view all the answers

What is the main difference in ownership between a sole trader and a partnership/private company?

<p>Ownership is shared with other people in a partnership/private company.</p> Signup and view all the answers

How might the legal structure of a financially successful business change over time?

<p>It may be altered to better suit the conditions at the time.</p> Signup and view all the answers

What are some external factors that can influence the choice of legal structure for a business?

<p>Legal liability, Cost and complexity of formation, Tax implications</p> Signup and view all the answers

Why is it important for a business to consider the size of its business when choosing a legal structure?

<p>The size can determine the appropriateness and feasibility of certain legal structures.</p> Signup and view all the answers

How do ownership and finances play a role in influencing the legal structure choice for a business?

<p>Ownership determines how control is shared, while finances impact the need for additional capital.</p> Signup and view all the answers

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