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Type of Business Organisations - Coggle Diagram
Type of Business Organisations
Sole Trader
Partnership
Advantages
Partners keep all profits
Partners have full control
Cheap, quick, and simple to start
Disadvantages
Partners fully responsible for all debt (unlimited liability)
Difficult to raise finance (rely on personal savings)
Conflicts between partners
Decision by one partner is binding on all others
Definition
Partners have unlimited liability
Usually unincorporated
Owned by 2 or more people
Normally max 20 partners (varies)
Limited Company
Types
Private Limited
Shares usually held by friends/family
Small number of shareholders
Pubic Limited
Shares offered to & owned by the public
Advantages
Shareholders have limited liability
Easier to raise finance (can sell shares)
Continues to exist if owner leaves or dies
Definition
Separate legal entity from owners
Owned by shareholders
Incorporated business
Shareholders have limited liability
Disadvantages
Original owners may lose control if share sold to public
Accounts must be published for the public
Difficult to set up (legal formalities)
Co-operative
Types of Co-operative
Consumer Co-operative
Owned by consumers who buy goods/services
Producer Co-operative
Owned by producers who sell their goods
Worker Co-operative
Run by its employees
Advantages
Democratic
Fewer chances of conflict (shared common interest)
Owners usually have limited liability
Often get tax relief from government
Death of member does not affect continuty
Definition
Owned & managed by people who use its services
Disadvantages
Accounts must be accessible to the public
May have to hire expensive professionals (member lack skills)
Difficult to raise finance (cannot issue shares)
Social Enterprise
Advantages
Committed employees (personal interest in aims)
High job satisfaction for employees
Bring positive change to communities
Disadvantages
Less competitive due to limited capital
Related Organisations
Charities
Not-for-profit
Franchise