1. Sole Trader
- a business that is owned and operated by one person although they can employ members of staff. Examples: small shopkeepers, market-traders, plumbers, electricians and hairdressers.
- There are not many legal regulations that need to be taken care of when setting up this type of ownership.
- The owner is entitled to keep all of the profit.
- The owner can pick their own holidays, breaks and pay.
- The owner has the ability to be able to create close realtionships with customers.
- The owner has complete control of the business - full responsibility for meeting capital requirements, running costs and the financial control of the business.
- There is not somebody who the owner can discuss business matters with.
- The business has unlimited liability.
- There is a lack of continuity due to events such as illness or death.
- There is not a lot of specialist skills and this is due to the business being small.
- Hard to raise finance because there is no owners to put in capital.
-a group or association of two to twenty people who agree to own and run a business together. Examples: lawyers, accountants and doctors.
- Expenses, responisbility and decision-making is all shared.
- More capital can be invested into the business.
- Continuity- partners can cover each others absences.
- They all have complete control over the business.
- Each partner offers specialism.
- The partners can disagree with each other.
- They have unlimited liability.
- The ownership is an unincorparated business.
- One or more of the partners could be dishonest and unreliable.
- The business is limited to twenty partners.
3. Private Limited Company (LTD)
-a campany in which shareholders (no more than 50) contribute funds to the company in exchange for share (that cannot be sold on the Stock Exchange). Examples: Virgin and Dyson
- The business has limited liability.
- It is easier to raise capital because shares can be sold to a large number of people.
- Retained control - they don't have to sell too many shares
- Management is shared
- Amount of specialism is shared
- There is continuty
- It is expensive to set up
- Share cannot be sold to the public
- Less privacy - accounds can be seen by members
- Shares cannot be sold without agreement from other shareholders.
4. Public Limited Company
-a company in which an unlimited amount of shareholders contribute funds to the company in exchange for shares (that can be sold on Stock exchange). Example: Tesco, Vodafone and BP.
- The business has limited liability and is an incorparated business
- Finance can be raised easily (there are not restrictions to selling on Stock exchange)
- Continuity - the business will still exist if a partner dies
- There is a high degree of specialisation
- The company is vulnerable, as it can be taken over
- The shareholders must receive some of the profit that is made
- Annual accounts have to be published
- Communication and management problems might occur
- There are a few complicated legal issues that need to be taken care of