Topic 1 - The Legal Forms of a Business

- 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.

Advantages:

• 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. 

Disadvantages:

• 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.

Advantages:

• 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.

Disadvantages:

• 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.

-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

Advantages:

• 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

Disadvatges:

• 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.

-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.

Advantages:

• 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 

Disadvantage:

• 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