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Sole Traders, Partnerships, LTD, PLC's, Public Sector - Coggle Diagram
Sole Traders
Disadvantages- Sole Traders take on a lot of responsibility and risk due to being the only person liable for their debt. Also this can be hard as Sole Traders have to save up all the money for their business themselves or have a willing family member to help. Sole Traders also work long hours to avoid having to pay more money for labor workers to ensure a steady income
Definition- Sole Traders run and own their own business like any self-employed person would however it is completely up to the company owner to be liable for everything, these businesses are usually quite small and rely on their own savings
Advantages-Sole Traders can keep all of the profit themselves resulting in a high income if the company is very successful.Owning the company entirely also means they can make all of the decisions themselves, having full control. Starting as a Sole Trader is also the easiest way to start out with your own business as it has less rules and regulations to follow than any others
Partnerships
Defintion-Partnerships are companies that can be set up having 2-20 partners involved, this gives people the opportunity to invest a certain amount and have a certain role in a company. They can also have "sleeping partners" who invest but are not involved in the day-to-day running of the business
Advantages- Partnerships earn more money than Sole Traders, banks are also more likely to lend money to a company that has many partners as there are multiple people that can handle a debt. Having multiple partners means that they can also split the workload,responsibilities and have a range of different skills each person can bring to the business.
Disadvantages- Having so many different partners can also include a lot of different opinions and how they should run the company, resulting in disagreements and less control over decisions depending on how many partners there are. Similarly they will have to split all the profits made between up to 20 people
LTD
Definition- A Private Limited Company is owned by Shareholders, before they can purchase a share of the company they have to be invited. After this they can own a percentage/portion of the business.
Disadvantages-Within a LTD there is often a lot of paperwork to complete which can be very time consuming for the owners. They may also require outside professional help to manage the finances of the company as they can be confusing and complicated.
Advantages- LTD's give individuals the opportunity to be their own boss and make important decisions. As well as this, owners have limited liability and do not have to much pressure financially. Shares within a LTD can also be sold to raise money.
PLC's
Definition-Public Limited Companies are often ideal for larger businesses, the shares are sold online for the public to invest in and once they have been sold are owned by "Shareholders".They have a voice in the company and can have an input on how it is run
Advantages- Similarly to LTD, PLC's have a limited liability and do not have to worry as much financially than other companies. As they are most commonly larger companies they can achieve economies of scale, meaning a negotiable price for products from the suppliers
Disadvantages- A disadvantage of a PLC's is that they can be very expensive to set up, as usually they will cost around £50,00 minimum to set up. They also require a more complex accounting and reporting requirements than any of the other companies.
Public Sector
Advantages- These companies are available to all UK residents for "free" and are used in the interest of the public's health, safety and well being.This Industry is also a very stable one as it has been set up by the government and is kept running by the public
Definition- Public Sector are companies run by the government to provide a service for the population. The money is provided through TAX, National Insurance and VAT. Some of these services are the NHS, Schools and Council Housing
Disadvantages- The Public Sector is entirely up to the government and how they want to run it and cannot be chosen by the public even though they pay for it in TAX.The public sector is also a very big company to run and needs to have a lot of employees to keep running