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Types of Organisations (PRIVATE SECTOR: For-Profit commercial…
Types of Organisations
Private Sector
Business owned by private individuals
Small one person business to large multinationals (c&a)
Public Sector
Business run or funded by the government
The NHS, police...
PRIVATE SECTOR: For-Profit commercial
Sole trader
Person has sole ownership and control of the business. The person provides all the capital.
If the business fails the owner has unlimited liability thus, liable for all debts
There are no legal formalities to set up the business. May have to get a licence to sell alcohol or pharmaceutical.
Once turnover has reached a certain amount the business has to register to pay VAT
Partnerships
Between 2 and 20 people, each investing capital
If business makes a loss all partners have unlimited liability
Partners should set up a
partnership agreement
before going into business together.
According to the
limited partnerships act
some partners can have limited liability - they do not take an active role in the management of the business --> SLEEPING PARTNERS
One partner must still have unlimited liability though
Incorporated Businesses
PLC
Can sell their shares on the stockmarket
To trade, a prospectus must be issued giving details of the company and invites the public to subscribe to its share.
It must then raise an amount of share capital through a share issue. Before trading, it must have at least received 25% of its share value.
A certificate of trading will then be issued
LTD
Cannot sell their shares on the stockmarket - these can only be given to people linked to the business.
These companies raise their capital by selling shares to shareholders
They have limited liability - shareholders are not liable for the debts of the business should it fail
For-Profit Social Enterprises
- A type of business that has a social purpose
Cooperatives
The business is owned and run by all members.
Can have more than 20 - each actively participating.
All profit + workload + voting rights are shared equally
Retail / consumer cooperatives
Buy more get more -- Loyalty card program (get points if you buy alot)
Housing cooperatives
Between members working together for the community
Employee cooperatives
Employees are also the owners of the business.
Happens when a business is about to fail and is taken over by employees
Microfinance Providers
Aims to provide a small amount of finance to people who would not have access to funds otherwise.
Money is eventually repaid through a certain time period. There is an interest rate but this is less than other banks
Public-Private Partnerships (PPP)
Between private and public sector - can involve the construction of a facility with a social aim.
Can be for a project - London olympics
Private businesses are often given incentives to participate
Non-Profit Social Enterprises
Charities or Non-governmental Organizations (NGO)
No aim to make a profit, main aim is social purpose
If any excess money is generated - a surplus - this will be reinvested for further social benefits
Amnesty, Save the whale
Both pay corporation tax on profits and register accounts with company houses
To do so 2 documents have to be completed
The article of Association
Deals with the international relations -- How the company will be run
Must be signed by those who have signed the Memorandum of Association
Length of time directors can serve before election
The procedures of issuing + transferring shares
The timing, frequency and conduct of meetings
Rights of shareholders depending on types of shares
The memorandum of Association
Details the external relations of the company with the world
Gives the constitution and general details of the company
The name of the company
Liability of the members
Name and address of the registered offices
Number of capital to be raised and shares to be issued
The objectives of the company
A statutory Declaration
- declaring the company has satisfied the requirements of the acts