Sole trader
One owner keeps the profit and control but has unlimited liability.
CAIE IGCSE Business 0264 - Paper 2
1.4 Types of business organisation
Topical Past-Paper Questions
Why it’s here: Sole traders, partnerships, companies, franchises and joint ventures.
Key concepts to revise
The main ideas to know for 1.4 Types of business organisation.
Partnership
Two or more owners share responsibilities, finance, profit and risk.
Limited company
A separate legal identity gives shareholders limited liability.
Franchise and joint venture
Businesses may grow using another brand or cooperate on a shared project.
Exam material
Past-paper questions
Past-paper question
0450/21/M/J/25
[8] marks
1(a)Explain two advantages and two disadvantages to Philip of changing PF from a sole trader business to a private limited company. [8] Advantage 1 :
Advantage 2 :
Disadvantage 1 :
Disadvantage 2 :
Free topical past paper practice on sole traders, partnerships, private and public limited companies, franchises, licensing and joint ventures.
For 6-mark questions, give a clear advantage and disadvantage, then explain the effect on the named business. Use terms like limited liability, unlimited liability, share capital, control, risk and access to finance accurately.
Owned and run by one person.
Unlimited liability means the owner’s personal assets are at risk.
Owned by two or more people.
Partners share skills, capital, workload, profit and responsibility for debts.
An incorporated business owned by shareholders.
Shares are sold privately, not on the stock exchange.
Can sell shares to the public on a stock exchange.
Can raise large amounts of capital, but faces takeover risk and public reporting requirements.
Permission for another business to use a product, brand, idea or technology.
Can help a business enter overseas markets.
Two businesses work together on a project.
They share costs, risks, skills and profits.
Table 2.1
Do you think the advantages of operating as a sole trader business are greater than the disadvantages? Justify your answer.
Define ‘business partnership’.
Define ‘sole trader’.
Define ‘licensing’.
Explain one advantage and one disadvantage to SNT of forming a joint venture when entering new markets in other countries.
Table 3.1
Explain one advantage and one disadvantage of JTA being a public limited company.
Table 4.1
Do you think operating as a sole trader is the best type of organisation for a small business? Justify your answer.
Explain one advantage and one disadvantage to Meena of operating as a sole trader rather than being in a partnership.
Outline two characteristics Meena will need to become a successful entrepreneur.
Table 2.1
Define ‘public limited company’.