Choosing The Right Legal Structure For The Business Flashcards
Incorporated businesses:
Private limited company (LTD)
Public limited company (PLC)
Unincorporated businesses:
Sole traders
Partnerships
Unincorporated business
A firm in which there is no distinction in law between the individual owner(s) and the business itself
Incorporated business
A firm with a legal identity that is separate from the individual owners
Unlimited liability
a situation where the owners of a business are accountable for the debts that a business may incur
Limited liability
Where the owners of a business are not financially accountable for any debts that a business may incur.
Sole trader
Business with a single owner
Partnership
A business owned by 2-20 people
Private limited company
A small to medium sized business that is usually run by a family or a small group of people.
Public limited company
A business with limited liability
Advantages of sole trader
Few legal formalities
Easy and cheap
Owner takes profit
Disadvantages of sole traders
Unlimited liability
Limited capital
Difficulties regarding holidays
Advantages of partnership
Wide range of skills and knowledge
Raise greater amounts of capital
Reduced pressure on owners
Disadvantages of partnership
Share control
Argument common
Unlimited liability
Advantages of a private limited company
Limited liability
Access to more capital
More privacy
