AS Business: Legal structures

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  • Created on: 20-03-13 22:54
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Businesses with unlimited liability
Owners are liable for any debts incurred by the business, even if this requires them to sell all their assets and possessions
and become personally bankrupts.
Sole Traders
One individual who can employ other staff, they own and operate the business.
You make all decisions, although they must face the burden of failure.
When 2 or more people start a business without forming a company.
Because people are working together but are unlimitedly liable for any debts, it is vital that the partners trust each other; the 1890
partnership act sets out a series of rules that govern partnership issues.
Businesses with limited liability
Owners are not liable for the debts of the business; they can lose no more that the sum they invested.
Private limited company
The shares of a private limited company can not be bought and sold without the agreement of the other directors.
Therefore the company can not be listed on the stock market.
As a result it is possible to maintain close control over the way the business is run.
Public limited company

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When a private limited company expands to the point of having share capital of more than £50,000; it can convert to a public limited
It can be floated on the stock market, which allows the public to buy shares.
This increases the company's access to share capital, which enables it to expand considerably.
Organisations that have charitable status ensure that those who fund the charity are not liable for any debts. It also provides significant tax
benefits.…read more


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