IGCSE/ A-Level Revision Questions

Model Answer:

Ownership Form	Advantages	Disadvantages
Sole Trader	Full control over decisions Simple to set up and low administrative costs All profits retained by owner	Unlimited personal liability Limited access to finance Business continuity depends on owner
Partnership	Shared capital and skills More finance than sole trader Shared decision‑making reduces burden	Partners have joint and several liability Potential for disputes Profit must be shared
Private Limited Company (Ltd)	Limited liability protects personal assets Easier to raise external finance (shares, loans) Perpetual existence	More complex and costly to set up Regulatory compliance (accounts, filing) Profits distributed as dividends after corporation tax

For a small retail business that wishes to protect the owner’s personal assets, attract modest external finance and ensure continuity, the private limited company is the most appropriate choice. Although it involves higher administrative costs, the limited liability and credibility with suppliers and lenders outweigh these drawbacks. If the owner values absolute control and wants to keep costs minimal, a sole trader could be considered, but the risk of unlimited liability makes it less suitable for growth.

Business – 1.2 Business structure – Business ownership | e-Consult

1.2 Business structure – Business ownership (1 questions)

Support e-Consult Kenya