Advantages/disadvantages of different business structures

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  • Created by: Hollie
  • Created on: 15-05-13 11:36
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  • Business Structures
    • Franchise
      • large business's cooperate with sole proprietors which takes some of the risk away than setting up a new business
      • franchisor looses some control which could reflect the company in a bad way
      • franchisee must pay royalties for use of product and property
    • Sole trader
      • unlimited liability
      • no formal rules/administrative costs for establishing the business.
      • limited sources of finance, long hours, limited holiday and trouble during periods of ill health.
    • Partnership
      • unlimited liability
      • Skills are shared
      • more capital as more people are contributing financially
      • shared strain, holidays and ill health can be managed
      • sharing profit can often cause arguments
      • loss of control, decision making must be shared
    • Public limited company
      • start up share capital of £50,000
      • Shares floated on stock market which improves the business's access to capital
      • limited liability
      • converting to PLC can be time consuming and difficult
    • Private limited company (LTD)
      • Start of capital of around £100
      • Shares are not listed on start market but are available to friends and family
      • Support of friends and family
      • Legally must state 'LTD' after name which warns people they are relativly small.
      • Limited liability
    • Co-op
      • sometimes worker owned or customer owned. A lot of benefits to workers
    • Not for profit
      • Charitable organizations or businesses that provide a service.Those that fund the charity are not liable for debts
      • provides significant tax benefits


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