Business forms

Limited liability

This means that the owner of the business has no personal liability for business debts.

The business is a separate legal entity

Unlimited liability

If a business gains debts, goes bust or is sued this could be a problem for the owner

Sole trader

This is a business owned by one owner

Pros

Cons

Easy to set up, make quick decisions, less capital needed, owner keeps all profit

unlimited liability, difficult to raise money, no one can take over, don't have economies of scale

eg. plumbers, hairdressers, builders

Private limited company

Ltds can expand and grow by selling shares, they cannot be bought by the public.

Pros

Cons

Limited liability, can raise extra capital by selling more shares, has own legal status

Company is not private,expensive, cannot sell shares stock exchange

Public limited company

Once a limited company has grown and needs futher investment it may consider to become a PLC. Shares can be bought by anyone

Pros

Cons

Limited liability, can sell shares publicly, banks and investors more likely to lend cash

Expensive, must publish annual accounts, must have £50,000 in share capital before becoming a PLC

Public sector organisations

These are all owned by the UK government.

Taxes paid by UK citizens go towards paying for the organisations

e.g nurses, police