Ownership types Flashcards
What are the 4 types of ownership
• Sole traders
• Partnerships
• Private limited companies (ltd)
• Public limited companies (plc)
What is a sole trader?
A form of business that is owned/ managed by one person
What the pros of a sole trader?
-Make all decisions
- Make all the profit
- easy to set up
What are the cons of a sole trader
- All the liability
-cant take a holiday
-limited skills
-hard to raise finance
What is a partnership
When 2 or more people pursue a common purpose in setting up a business like profit - as stated by the 1890 Partnership Act
What are the pros of a partnership
- share workload
-simple paperwork
-more sources of finance than sole trader
-varied skill
What are cons of partnership
- full liability
- collective decisions
-share profits
What is a private limited company (Ltd)
Is a business where in all the shares are privately owned
Not for public advertisement - restrictions on who shares can be sold to
usually family owned
Pros of Ltd
- Limited liability
- Profit kept between shareholders
- range of skills
- don’t have to publish revenues
Cons of Ltd
- when selling shares you have to offer them up to everyone in the Ltd before leaving
-complicated paperwork
-financial papers of each account must be produced
What is a public limited company (PLC)
A company on the stock market that is open to everyone.shareholders fund, own and get the profit of the company. there are capital gains.
Pros of PLC
- diverse skills
- limited liability
-shares offered up on the shares market
Cons of PLC
- many shareholders
-risk of hostile take over
- complicated paperwork
- have to provide information on financial statements / profits of the business
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Cons of non-profitable organisations
hard to survive without constant profit made
