Legal Forms of a Business revision

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  • Legal Forms of a business
    • Sole Trader
      • is a business owned and operated by a single person
      • A sole trader has Unlimited Liability
        • This means that if the business was to go bankrupt, any further costs would be accountable to the owner who would have to pay them.
          • A sole traders personal life can be affected by the bankruptcy of their business
      • Sole traders are typically small scale businesses that operate over a small region.
      • A sole trader has complete control over their own business.
        • They have no set timetable and can work for as long, or as little as they please.
          • However a Sole trader will need to consider how much work they do in order to ensure they make a profit.
        • They do not have to address issues with other members of the business and can make any decisions without the approval of others.
          • The lack of other members however can mean a lack of expertise within the business and/or financial support.
      • Examples; A lot of local stores will besole traders, Hairdressers, Bakers, Barbers
    • Partnership
      • is a group of between 2 and 20 people who contribute capital and expertise to the business
        • Having a partnership business of people with different business expertise means the business will be easier to run.
          • Partnerships also offer financial support with other members each investing a portion into the business.
          • A disadvantage of a partnership however is that all members must be addressed when making decisions and majority must be in agreement for a decision to go through.
      • A partnership has Limited Liability
        • Limited liability provides protection for the owners of a business this is general the people who have invested money and/or purchased shares.
          • Limited Liability is regarded as a privelage.
        • Members only risk the money they put into the business, upon bankruptcy no costs are drawn from any of their personal assets.
      • Examples; Google, Apple(also started out as a partnership), Twitter
    • Private Limited Company (LC)
      • Private Limited companies are usually large firms often involving enterpirses or could be large well known family firms generally involving just a handful of people
      • They are most suited for small and medium sized operations
      • Private limited companies have limited liability.
      • A Private Limited Company can't sell its shares on the market.
        • Shares can only be sold between close associates of the business and family members.
      • Examples; JCB, Virgin Atlantic, Arcadia, Iceland
    • Public Limited Company (LTD)
      • Most well known and famous businesses are public Limited Companies.
      • Public Limited Companies have Limited Liability
      • A Public Limited Company is able to sell its shares to the public on the market.
        • Selling shares can account for a lot of profit for a Public Limited company based on its success.
      • A Public Lmited Company has to publish financial information and records.
        • This makes it easy for any competitors to gain information on the current success of the business.
      • Examples; Mothercare, Microsoft, McDonalds, Starbucks
    • Not for Profit
      • A not for profit business, often a charity. is a business that is solely run by volunteers and any income it makes is not for personal use and is donated to a cause.
      • A not for profit business is usually set up with funds given by an individual or is financed by donations from the general public.
      • Because they are a not for profit business they do not need any Liability because they do not risk losing any earned funds.
      • Examples; Oxfam, Charity:Water. Red Cross, Do Something.

Comments

revisionnerd

A partnership has unlimited liabiltity, they are basically a sole trader but with more members :-)

revisionnerd

A partnership has unlimited liabiltity, they are basically a sole trader but with more members :-)

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