business

?
View mindmap
  • Business Ownership- continued
    • Private limited company
      • The business has a separate legal entity from its owners (it can own property in the name of the company; it can sue and be sued)
      • The company is owned by shareholders who invest their own money in the business.
      • These shareholders are usually family and friends.
      • These shareholders are usually family and friends.
      • The shareholders receive dividends (a share of the profit) from the business.
      • The shareholders receive dividends (a share of the profit) from the business.
      • The business is run by a Board of Directors, which in many LTDs is made up of the shareholders
      • To become an LTD the shareholders/directors must complete 2 documents:Memorandum of Association – sets up the companyArticles of Association – states how the company is to be run
      • Benefits
        • Limited liability
        • Shared responsibility
        • Financial information stays private
      • Drawbacks
        • Any new shareholders must be agreed with all other shareholders, so future sources of finance through shares can be difficult to raise
        • Decision-making amongst all shareholders (as directors) can take a long time
    • Public Limited Company (PLC)
      • The business has a separate legal entity from its owners (it can own property in the name of the company; it can sue and be sued)
      • The company is owned by shareholders
      • Shares can be bought and sold on the stock market
      • There must be at least £50,000 in share capital to become a PLC
      • The shareholders receive dividends (a share of the profit) from the business.
      • There must be at least 2 shareholders (but usually there are many thousands
      • The business is run by a Board of Directors who are elected by the shareholders
      • To become a PLC the company must complete several documents:Memorandum of Association – sets up the companyArticles of Association – states how the company is to be runProspectus for potential shareholders to read
      • Benefits
        • Limited liability
        • Large amounts of capital can be raised through issuing more shares
        • High profile business (well known)
      • Drawbacks
        • Financial accounts must be available for the public to view.
        • Legal process to become a PLC is lengthy and costly
        • Original owners are unlikely to retain control over decision making
        • Greater risk of take-over

Comments

Jdynqq

Report

Hi all. I am the owner of a couple of medium quality online stores (stable average prices and the quality of goods is the same). I do not have a team with whom I would promote this business, so I often hire people who will do secondary things (accounting, tech support, etc.). This is wow support inbound call center services. This article helped me understand that sometimes it is better to pay people who already have a huge amount of knowledge in one area than to try to do it yourself.

Similar Business Studies resources:

See all Business Studies resources »See all Business case studies resources »