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Business Ownerships - Coggle Diagram
Business Ownerships
Sole traders
A sole trader is an individual owning a business by theirselves. They own all the business assets individually and is personally responsible for the debts (unlimited liability).
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Disadvantages: unlimited liability. Harder to raise finance.
The business is the owner.
May be a higher tax rate than a company.
Partnerships
Where a business is started and owned by multiple people. The partners between them share the business assets and all business liabilities. They have unlimited liability.
Advantages: Quite simple.
Minimal paperwork once partnerships is set up.
Partners can provide specialist skills.
Greater potential to raise finance.
Disadvantages: Unlimited liability.
A bad decision by one damages interest.
Harder to raise funds than a company.
Complicated to sell or close.
LTD
A type of business structure called limited company, which limits the company's liability to its assets.
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PLC
In a PLC shares are sold to the public on the stock market. Shareholders become part owners of the business and join in making decisions.
Disadvantages:
It is expensive to set up.
More complex accounting.
Shareholders may clash in making decisions.
Shareholders expect a percentage from the profits.
Advantages:
Business can raise additional finance.
Shareholders have limited liability.
Increases negotiation opportunities with suppliers.
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