What is a sole trader and partnership?
Parntership: A group between 2 – 20 people who run a business together. Advantages: More capital is available to invest. Owner has complete control. Partners can cover each other’s absence. Disadvantages: Unlimited liability, number of partners is limited, one partner could be unreliable.
Sole Trader: A business owned and operated by one person, although they can employ staff. Advantages: Can keep all profit. Work the hours he choose, few legal regulations. Disadvantages: Unlimited liability, business will stop working if bob is sick, cant grow.
Similarites?: They have unlimited liabilty, their business cannot grow, because there is only 2 workers, both have to pay tax (hmrc), both get to choose when they went to go on holiday.
Differences?: If you die in a partnership, the business will carry on. In a partnership there is a hgiher capital. In a sole trader you can have all the proft. In a sole trader there are no arguements.
LTD. (private limted company).
What is a LTD?: A company in which a number of shareholders. Not more than 50 contribute funds to the company in returns for shares. Shares cant be sold on the Stock exchange, theyre sold to family/friends.
Advantages; Limted Liabilty, Eaiser to raise capital, Management is shared.
Disadvantages: Expensiveand difficult to set up, Cant advertise, Shares cant be sole to public.
Similarties and differences between partnerships and LTDS.
Similarites: Responsiblty is shared in each type of company, They are both expensive to set up, Management is shared.
Differences: LTD has limted liabilty annd a partnership has unlimited liabilty, In a LTD it eaiser to raise capital. In an partnersdhip you can have 20 partners however an LTD you can have shareholders.
Public Limitied Liabilty.
What is a public limted company?
A company in which an unlimited number of sharehoders contribute funds to the company in return for shares. Shares can be sold on the stock exchange.
Advantages: Limted Liabilty, It's an INCORPORATED BUSINESS, high degrees of specialisation.
Disadvantages: Minimun 50,000 capitial to start, may have communication and managemen problmes due to size, annual accounts have to be published full.
A franchisee, who buys the right from a franchisor to copy a business format and a franchisor, who sells the right to use a business idea in a particular location.
- Everything is already set up for you
- You don't have to struggle creating a new name/image
- The reputation is already there
- Get free training and equipment
- Staff are easy to get
- You get no say in anything that goes on
- You can't make any changes to the brand name or image
- The business has to stay how it is
What are cooperatives?:
Co operatives are businesses that are owned by members.
Members are usually employees within the business.
Each member has a share in the business.
Maint types of cooperative?:
Retail - which buy goods in bulk at a discount and sell them cheaply to members.
Producer - which produce goods and then get together to sell them to gain a better price.
Worker - which are businesses that are owned by their members.
Advantages: has a special type of limited liabilty. Members have control over the business. Unlikely to be conflict as have common goals.
Disadvantages: Finance must be provided by members. Banks are relucant to lend to co ops. All members have equal say in the business.