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Differentiate Sole Trader, Partnership, Limited Companies, Public…
Differentiate Sole Trader, Partnership, Limited Companies, Public Companies.
Sole Trader
Business owned and controlled
One Person
Business do not require
a lot of capital
and can be
run effectively
by one person
Characteristics
Number of Owners
1
Liability
Unlimited
Powers
Solely with the owner
Profit
Solely to the owner
Legal Requirements
None
Publication of Annual Accounts
Not Required
Advantage
Easy
set up
Low overhead costs
No legal formalities
Owner's freedom to take decisions
Profit are one's own
Disadvantage
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 can take
an active part
running the business
Profit
Share among the partners
Legal Requirements
None
Publication of Annual Accounts
Not compulsory
Advantage
Easy to set up
Capital
Contributed by partners
Profit are share
according to
capital subcribed
Disadvantage
If business fail
each partner held responsible
all debts of the business
Difficult to obtain
extra capital other
partner
Partnership
not a legal entity
Limited Companies
Advantages
Shareholders have limited liability
Easier to
raise capital
Possible to employ specialist staff
Company name
protected by law
Disadvantages
The formation
running costs are
expensive
Shareholders only interested
in the return they
receive from the investment
Decision
making may be slow
Types of Limited companies
Private limited companies
Characteristics
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 restricted
Legal requirements
Registered with
"Registrar of Companies"
"Certificate of incorporation"
Compulsory
Only available
Register of Companies
Public Companies
Owned by central government
Limited liability
and runs a stated
owned industry
Board of Directors
Responsible for
day-to-day operations
Accountable to
Government Minister
Government Minister
Appoints the Board
Obtains funds for
the public corporation
The Cabinet
Decides the public corporation's policy
Accountable of
Parliament
Parliament
Who may question
the performance
to the public corporation