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differentiate sole trader, partnership, limited company, public companies …
differentiate sole trader, partnership, limited company, public companies
sole trader
business do not require
a lot of capital
and can be
run effectively
one person
advantage
profit are one's own
no legal formalities
easy to set up
low overhead costs
owner's freedom to take decisions
business owned and controlled
one person
characteristics
legal requirements
none
publication of annual accounts
not required
number of owners
1
liability unlimited
profit solely to the owner
disadvantage
business may not
prosper long term
work long hours
lack of capital
owner liable for all the losses
stress
partnership
advantage
profit are share
according to
capital subscibed
capital
contributed by partners
easy to set up
disadvantage
partnership
not a legal entity
if business fail
each partner held responsible
all debts of the business
extra capital other
partner
publication of annual accounts
not compulsory
profit
share among the partners
number of owners
2-20
liability
unlimited
legal requirements
none
limited company
advantages
company name
protected by law
possible to employ specialist staff
shareholder have limited liability
easier to
raise capital
disadvantages
the formation
running costs are
expensive
in the return they
receive from investment
shareholders only interested
decision
making may be slow
types of limited companies
private limited companies
characteristics
legal requirements
registered with
certificate in incorporation
registrar of companies
capital
contributed by the shareholders
number of owners
2 no upper limit
liability
limited for all shareholders
board of directors
elected by shareholders
transfer of shares is restricted
power and control
only available
register of companies
public companies
the cabinet
accountable of
parliament
limited liability
decides the public corporation policy
owned industry
owned by central government and runs a stated
board of directors
responsible for
accountable to
government minister