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Business Types : - Coggle Diagram
Business Types :
Sole Trader
Definition: Someone who owns a business by themselves; there is no legal distinction between the owner and the business.
Advantages: Easy to establish, no limit to the number of people you can hire, and you have complete control of the company
Disadvantages: Unlimited liability, capacity to raise capital is limited, and all the responsibility to make decisions for the company is all up to you.
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Partnerships
Definition: A formal agreement between two or more parties to jointly operate and/or manage a business.
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Advantages: Start up costs are low/easy to establish, more capital is available for the business, greater borrowing capacity
Disadvantages: The partners are unlimitedly liable for the partnership's debts, higher taxes, and conflicts and disagreements.
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Corporation
Definition: A legal entity that is separate and distinct from its owners; have limited liability unlike sole proprietorships and partnerships; shareholders are able to buy shares of the company.
Public Corporations
Advantages: Quicker decisions, easier planning and coordination, and raising funds through private sourcing.
Disadvantages: Misuse of power, consumer interests ignored, and risk of producing inefficient products.
Private Corporations
Disadvantages: Difficulty raising capital, lack of flexibility, and personal financial liability.
Advantages: Limited liability, separate to legal entity, easier to maintain, and most are tax efficient.
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