Business law; business organisations Flashcards
explain an unincorporated organization
no separate legal identity of its own
risks and liabilities involved belong to individuals who own or manage it
unincorporated association may be run as business or may be formed for non profit making pruposes
explain an incorporated organisation
legal entity in its own right
owners have limited personal liability
risks and liabilities of an incorporated organisation are its own responsibility and not responsibility of individual members, shareholders or directors
examples of unincorporated organisations
soletrader
general partnership
limited partnership
examples of incorporated
private limited company
public limited company
limited liability partnership
explain sole trader
simplest business organisation to set up
no regulations, disclosures or public accountability requirements
however sole trader must comply with employment law and health and safety law
sole trader self employed and has unlimited liability sole trader is unincorporated business
business is likely to be small but no limit on size sole trader could have large turnover and many employees
what are the types of partnership
limited
general or ordinary
limited liability
explain general/ordinary partnership
most common type of partnership
governed by partnership act 1890
relationship between partners is contractual
general is unincorporated so partners have unlimited liability for debts of business
explain limited partnership
governed by limited partnership act 1907
not common business structure
allows for one or more partners have limited liability provided at least one of the members has full liability
partners who have full liability are called general
must be registered at companies house until registered limited partnership will regarded as general partnership
explain limited liability partnership
created by limited liability partnerships act 2000
new form of business structure
LLP a body corporate and has legal entity separate from that of its members
LLP has organisational flexibility of partnership and taxed as a partnership
can be tax advantage to members of LLP as taxed on shares of profits where as a company must pay corporation tax and its shareholders must pay income tax on dividends
unlike a company no requirements for LLP managed in a particular way
how to set up a LLP
must be run with a view to making a profit
general partnership in existence may convert to LLP
new business can be formed as an LLP
limited company can’t convert to an LLP
incorpration document setting up an LLP must be registered with registrar of companies at companies house
members of an LLP
participants of an LLP called members may be individuals or companies
must be at least two members of an LLP
no maximum number of persons who may be members
how can a company be created
grant of royal charter
act of parliament
registration under companies act
name some factors of a public companies
limited by shares
has plc after its name
has limited liability
is registered at companies house
have minimum 50000 allotted share capital
must have certificate of incorporation which states its a public limited company
explain private unlimited companies
fairly rare
most likely to be used for holding land or other investments
although company separate legal entity so enters into transactions on own each member of company fully liable for company’s debts
