Types of Ownership

  • Created by: 14m.green
  • Created on: 12-06-18 09:33
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  • Types Of Ownership
    • Sole Trader
      • A Sole trader is an individual who may or may not employ other people but who owns and operates the business and who has unlimited liability
        • -Keep all the profit (not tax) -Make your own decisions -Easy to set up -Private to you
        • -Unlimited Liability -Lack of Continuity -Long hours (Strains health/relationships) -Illness -Limited Specialisation
          • Unlimited Liabilty - Where the owner(s) are responsible for the debts of the business (remember - Cant pay we'll take it away) Continuity - A sole trader business lacks continuity. This means the company will end automatically if a sole trader dies, retires or decides to sell the business
    • Partnership
      • A Business Owned By 2 to 20 People (Typically)
        • A document containing an agreement that details the rights and obligations of each partner participating in a Business. Example : How profits will be split among partners. Sleeping Partner - An investor who doesn't work or do anything at the place of work/business
      • -Multiskilled (People With Different Specification) -Easy To Set Up -Privacy (Legally) -Shared Work Load And Ideas
      • -Sharing Profits -Shared Decisions -Unlimited Liability -Less Contol
    • PLC
      • Public limited company (plc) is a type of public company It is a limited liability company whose shares may be freely sold and traded to the public (although a plc may also be privately held, often by another plc), with a minimum share capital of £50,000
      • -Better access to capital  -Liquidity – shareholders are able to buy and sell their shares (if they are quoted on a stock exchange  -more easily make acquisitions – e.g. by offering shares to the shareholders of the target firm -Value of shares – the value of the firm is shown by the market capitalisation
      • -More regulatory requirements -Ownership and control issues - More vulnerable to takeovers -Initial financial commitment is higher
    • LTD
      • A private limited company, or LTD, is a type of privately held small business entity, in which owner liability is limited to their shares, the firm is limited to having 50 or fewer shareholders, and shares are prohibited from being publicly traded.
        • -Limited Liability -Continuity -Sale of Shares restricted to friends and family -Shares issued
        • -Share the profits with the shareholders - Inability to publicly sell shares -Growth may be limited by restricting the number of shareholders to 50.

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