Types of Business Organisation

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  • Types of Business Organisation
    • Sole Trader
      • Positives
        • Doesn't need much investment
        • Can make their own decisions
        • No legal paperwork
        • Cheap and easy to set up
        • High motivation
      • Person who is the exclusive owner of the company, entitled to keep all profits
      • Negatives
        • Working long hours
        • No shared responsibility
        • Collateral can be repossessed
        • Specialist skills - got to be the "jack of all trades"
        • Taxed through income tax
        • difficult to find cover (e.g. holiday / illness)
    • Partnership
      • Unlimited Liability
        • Negatives
          • Unlimited liability
          • High taxation
          • Arguments can occur with decision making. Trust is needed, so written agreement between partners should be made
          • Liable for each other's debt or actions
        • Positives
          • Shared responsibility
          • Flexible
          • Financial records are private
          • Capital is shared
        • 2-20 company members participating towards the overall capital. They share each other's debt, risks, responsibility etc. Sleeping partners invest but to not manage
      • Limited Liability
        • Similar to Ltd but needs to be incorporated and resister and file accounts with the company house
    • Private Limited Company
      • Positives
        • Separate entity
        • Limited liability
        • Only taxed on profits
      • Negatives
        • Bigger setup fees
        • Corporation tax
        • Annual meetings and fees
      • Owners and company are separate entities. Shareholders are owners of limited companies, and have limited liability and are not responsible for company debts
    • Public Limited Company
      • Positives
        • The shares and freely transferable
        • There is no limit to the number of shareholders
        • Financial records are relatively private
        • Separate legal entity
        • More capital through the sale of shares
        • Limited liability
      • Negative
        • Strict controls and regulations to comply
        • Costly and time consuming
        • The original owners may lose control
        • Legal formalities required
        • Huge in size and may face management problems
      • A public limited company is a company offering equity shares with limited liability to public investors on a registered exchange

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