Business ownerships

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  • Sole Trader
    • ACCN2- Business ownership
      • Partnership
        • Another easy form of business ownership.
        • Business owned by multiple people.. 2-50.
        • Partners share the decision making, can improve existing ideas.. develop on eachothers.
        • Partners may have different skills.
          • Owners have less control
          • Profit is shared
          • Potential disagreements
          • Unlimited Liability.
      • Incorporation
        • Some people don't like the idea of unlimited liability.
          • So they set up companies. A company is a separate legal entity.
            • A company doesn't have an owner, instead it has shareholders.
        • Private Limited Companies.
          • Can only sell shares Privately
          • Company can choose who they sell their shares with.
          • Advantages
            • Limited Liability
            • Pays out dividends
            • Added credibility which'll make it easier to borrow money.
            • Unlimited life.. don't cease with the death of owner.
          • Disadvantages
            • Must hold annual meetings.
            • More expensive to set up
            • Pay annual fee's and have to meet filing obligations.
        • Public limited companies
          • Can sell their shares publicly.
          • Company has no control over who decides to buy their shares.
          • Advantages
            • Limited liability
            • Will continue to grow even if customer dies.
            • Can make large amount of capital as there is no limit as to how many shareholders allowed.
          • Disadvantages
            • Costly and time consuming due to many legal requirements.
            • Must publish their accounts
            • Huge size and may face management problems.
    • This is the easier form of business ownership.
    • Business is owned by 1 person.
    • Owners make all the decisions.
    • Owner can work when they choose.
    • Owners get 100% of the profit.
      • Business will stop running if owner is sick.
      • Unlimited Liability.


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