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Different Types of Business Organization - Coggle Diagram
Different Types of Business Organization
Sole Trader
Owned and controlled by one person
Not require a lot of capital
Liability
Unlimited
Powers
Solely with the owner
Profit
Solely to the owner
Legal Requirements
None
Publication of Annual Accounts
Not required
Advantages
Easy to set up
Low overhead costs
No legal formalities
Owner's freedom to take decisions
Profits are one's own
Disadvantages
Lack of capital
Owner liable for all the losses
Work long hours
Stress
Business may not prosper long-term
Partnership
Number of owners
2 - 20
Liability
Unlimited
Powers
Each partner active in running business
Profit
Share among the partners
Legal requirements
None
Publication of Annual Accounts
Not compulsory
Advantages
Easy to set up
Capital is contributed by partners
Profits share according to capital subscribed
Disadvantages
Difficult to obtain extra capital
A partnership is not a legal entity
If business fail,
Each partner held for all debts
Limited Companies
Advantages
Shareholders have limited liability
Easier to raise capital
Possible to employ specialist staff
Company name is protected by law
Disadvantages
Formation and running costs are expensive
Shareholders interested return from the investment
Management separate from the ownership
Decision making may be slow
Types
Private limited companies
Number of owners
2 - no upper limit
Liability
Limited for all shareholders
Capital
Contributed by the shareholders
Power & Control
Board of Directors
Elected by shareholders
Transfer of shares is retricted
Legal requirements
Registered with
"Registrar of Companies"
"Certificate of Incorporation"
Publication of Annual Accounts
Compulsory
Public limited companies
Numbers of owners
2 - no upper limit
Liability
Limited for all shareholders
Capital
Contributed by the shareholders
Power & Control
Board of Directors
Elected by shareholders
Share are freely transferbale
Legal requirements
Registered as
"Trading Certificate"
Publication of Annual Accounts
Compulsory
Public Companies
Owned by central governments
Limited liability
Board of Directors
Functions
Responsible for day-to-day operations
Accountable to
Government mInister
Government Minister
Functions
Appoints the Board
obtain funds for the public corporation
Accountable to
The Cabinet
The Cabinet
Functions
Decides the public corporation's policy
Accountable to
Parliament