766275
Description
Mind Map by amy_leyland, updated more than 1 year ago
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Created by amy_leyland
over 10 years ago
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Legal forms of business
- Unincorporated Business
- No distinction in law
between owner and
business e.g. sole trader.
- No distinction in law
between owner and
business e.g. sole trader.
- Incorporated Business
- Business has a
separate identity to
the owners e.g. PLC
- Business has a
separate identity to
the owners e.g. PLC
- Ways a business can be
structured
- Sole Trader
- Partnership
- private limited company
- public limited company
- Sole Trader
- Sole Trader
- Is a business owned and
operated by a single person
- Advantages
- the business owner gets all the
profits which means that they
own the entire business
themselves.
- They can make whatever
changes they want to the
business and nobody else
can have a say in this
- It will be simple to
establish and operate.
- The owner can control all of the
inflows and outflows of the business
- the business owner gets all the
profits which means that they
own the entire business
themselves.
- Disadvantages
- Have unlimited liability so they
don't have protection therfore could
lose their house etc.
- Difficult to get bank loans
because they see the sole
trader as high risk.
- The owner has to take
responsibility and face
all consequences
- I ssues if owner is ill or
takes a holiday.
- Have unlimited liability so they
don't have protection therfore could
lose their house etc.
- Is a business owned and
operated by a single person
- Paternships
- Is usually between two and 20
people who contribute capital
and expertise to an enterprise.
- Advantages
- Different management
strategies brought together to
work well
- Flexibility in working hours
and can share the
workload.
- Cover for holidays and
illness.
- Different management
strategies brought together to
work well
- Disadvantages
- Less profit
- Conflict over ideas.
- Control is
shared.
- They don't have the
benefit of limited liability.
- Less profit
- Is usually between two and 20
people who contribute capital
and expertise to an enterprise.
- Private limited
company
- Advantages
- Easy to set up and
relatively cheap compared
to PLC
- Can raise money by selling
shares to friends and family
- More privacy than a PLC
- Easy to set up and
relatively cheap compared
to PLC
- Disadvantages
- Can't sell additional shares
without approval of
shareholders.
- Obliged to publish
financial info.
- Legal formalities for set up
- Can't sell additional shares
without approval of
shareholders.
- Advantages
- Public Limited
company
- A public company where
you can buy shares.
limited amount available
- Advantages
- Benefit from limited Liability
- Able to raise large
sums of money
- company likely to be
in the media regularly
- Shares are sold on the stock
exchange.
- Benefit from limited Liability
- Disadvantages
- Company has to publish detailed information which
could benefit their competitors.
- Company is vulnerable to take overs.
- Not all will go on the stock exchange.
- Company has to publish detailed information which
could benefit their competitors.
- A public company where
you can buy shares.
limited amount available
- limited liability
- a situation where the owners of a
business only are liable for the value of
their shares.
- a situation where the owners of a
business only are liable for the value of
their shares.
- Unlimited liability
- The owners are liable for all
the debts of the business
- The owners are liable for all
the debts of the business
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