Please enable JavaScript.
Coggle requires JavaScript to display documents.
Different Forms of Business - Coggle Diagram
Different Forms of Business
Sole Traders
Most common type of business
Individual owning a business
Can employ others
Advantages
Easy to close down
Minimal paperwork
Easy to set up
Disadvantages
Can pay a higher tax rate
Business is dependent on the owner
Full personal liability
e.g. Self employed electrician
Partnerships
Business is owned by more than one singular person
Shared liability
Legal agreement deciding factors such as profit share and decision making
Disadvantages
Full personal liability
A mistake damages all owners
Complicated to close down or sell
Advantages
Partners can bring specialist skills
Simple way for businesses to have multiple people working together
Potential to raise finance
e.g.Real estate firms
LTDs
More focused on profit rather than supplying goods and services
Can sue and be sued
Focused on shareholders
Disadvantages
Company names have restrictions
Required to pay incorporation fees
Accounting requirements are more complex
Advantages
Credibility and trust
Protecting a company name
Minimises personal liability
e.g. New Look
PLCs
Separate legal entities from founders
Can sue and be sued
Shareholders possess a part in the company but are not liable for assets
Disadvantages
Director's legal duties
Public disclosure of company information
Greater admin costs
Advantages
Easier to raise finance
Stable form of structure
Limited liability, which protects shareholders
e.g. Apple
Public Sector
Generally non-profit
Run on behalf of the public by the government
Small amount of companies
e.g. NHS
Disadvantages
Constant scrutiny
Usually less pay
Advantages
Higher job security
Not motivated by greed