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Factors which inform business ownership - Coggle Diagram
Factors which inform business ownership
Funding
Some forms of ownership require more paperwork
and legal expense.
Some forms of ownership require more paperwork
and legal expense.
.
This usually requires a merchant bank to facilitate the process, which will charge a commission fee, plus the costs of producing a prospectus and advertising the share sale.
Legal status
Legal status will have an influence on the form of
ownership as some forms will result in the business
being a separate legal entity from the owners e.g.
a limited company or charitable company, whereas
others will not e.g. sole trader or partnership.
Liability
Business owners must consider the financial risk
involved when choosing a form of ownership.
Control/decision making
.
The form of ownership chosen will influence the level of control the owner(s) have with regard to decision making
Legal/administrative requirements
.
It is much simpler to start up as a sole trader than it is to start up as a limited company, from both a legal and an administrative view.
Similarly, once the business is trading, there are
different requirements for different forms of ownership.
A public limited company must produce and publish audited accounts and submit them to Companies House, whereas a sole trader simply completes an income tax self-assessment form.