Legal Structures

Private Limited Company Ltd- a small to medium company usually run by a family or small groups of individuals who own it.
1. Advantages
  1. limited liability and business has a separate legal identity
  2. Access to more capital
  3. more private, only have to give a limited amount of financial info
  4. more flexible than a plc
2. Disadvantage
  1. shares can't be traded on the stock exchange
  2. more legal formalities than for an incorporated business
Unincorporated business- identity of the business and owner are the same (sole trades/partnerships)
Incorporated Business- legaln identity different from owner (private limited/public limited)
Unlimited Liability- owner is liable for debts that the business may occur
Limited Liability- owner is limited to the fully paid up value of their share capital
Sole Trader- business owned by one person
1. Advantages
  1. easy and cheap to set up
  2. owner takes all the profit
2. Disadvantage
  1. unlimited liability
  2. Limited capital
  3. Problem if ill or on holiday
Partnerships- a form of business which 2 or more people operate
1. Advantages
  1. More skills
  2. raise greater amounts of capital
2. Disadvantages
  1. control shared
  2. arguments
  3. unlimited liability unless limited partnership
Public Limited Company PLC- limited company, share capital over 50,000; at least 2 directors, qualified secretary
1. Advantages
  1. limited liability
  2. easier to raise finance due to stock exchange listins
  3. suppliers more willing to offer credit
2. Disadvantages
  1. must publish lots of financial info
  2. founders may lose control to shareholders

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