UNIT4: TYPES OF BUSINESS ORGANIZATION.
There are five main forms of business organization in the private sector. There are:
+ sole traders
+ partnerships
+ private limited companies
+ public limited companies
+ co-operatives
+ sole traders
+ partnerships
+ private limited companies
+ public limited companies
+ co-operatives
SOLE TRADERS:
Sole trader is a business owned by one person.
is a business owned and operated by just one person.
is the most common form of business organization.
The only legal regulations which must be followed are:
+ The owner must register with, and send annual accounts to, the Government Tax Office.
+ The name of the business is significant.
+ In some industries, The sole trader must observe laws which apply to all firms in that industry. These include health and safety laws and obtaining a licence.
Sole trader is a business owned by one person.
is a business owned and operated by just one person.
is the most common form of business organization.
The only legal regulations which must be followed are:
+ The owner must register with, and send annual accounts to, the Government Tax Office.
+ The name of the business is significant.
+ In some industries, The sole trader must observe laws which apply to all firms in that industry. These include health and safety laws and obtaining a licence.
LIMITED LIABILITY:
limited liability means that the liability of shareholders in a company is only limited to the amount they invested.
UNLIMITED LIABILITY:
Unlimited liability means that the owners of a business can be held responsible for the debts of business they own. Their liability is not limited to investment they made in the business.
* A person would recommend a sole trader structure to people who:
+ are setting up a new business
+ do not need much capital to get the business going
+ will be dealing mainly with the public
limited liability means that the liability of shareholders in a company is only limited to the amount they invested.
UNLIMITED LIABILITY:
Unlimited liability means that the owners of a business can be held responsible for the debts of business they own. Their liability is not limited to investment they made in the business.
* A person would recommend a sole trader structure to people who:
+ are setting up a new business
+ do not need much capital to get the business going
+ will be dealing mainly with the public
PARTNERSHIP:
Partnership is a form of business in which two or more people agree to jointly own a business.
is a group or association of at least two people who agree to own and run a business together.
A partnership agreement is the written and legal agreement between business partners. It is not essential for partners to have such an agreement that it is always recommended.
who would be advised to create a written agreement with a partner called a partnership agreement or deed of partnership.
Partnership is a form of business in which two or more people agree to jointly own a business.
is a group or association of at least two people who agree to own and run a business together.
A partnership agreement is the written and legal agreement between business partners. It is not essential for partners to have such an agreement that it is always recommended.
who would be advised to create a written agreement with a partner called a partnership agreement or deed of partnership.
UNINCORPORATED BUSINESS:
Incorporated business is one that does not have a separate legal identity. Sole traders and partnership are unincorporated business.
Incorporated business is one that does not have a separate legal identity. Sole traders and partnership are unincorporated business.
INCORPORATED BUSINESSES:
Incorporated businesses are companies that have separate legal status from their owners.
This means that:
+ A company exists separately from the owners and will continue to exist if one of the owners should die.
+ A company can make contracts or legal agreements.
+ Company accounts are kept separate from the accounts of the owners.
SHAREHOLDERS:
Shareholders are the owners of a limited company. They buy shares which represent part ownership of a company.
Incorporated businesses are companies that have separate legal status from their owners.
This means that:
+ A company exists separately from the owners and will continue to exist if one of the owners should die.
+ A company can make contracts or legal agreements.
+ Company accounts are kept separate from the accounts of the owners.
SHAREHOLDERS:
Shareholders are the owners of a limited company. They buy shares which represent part ownership of a company.
ANNUAL GENERAL MEETING:
An annual general meeting (AGM) is a legal requirement for all companies. Shareholders may attend and vote on who they want to be on the Board of Directors for the coming year.
An annual general meeting (AGM) is a legal requirement for all companies. Shareholders may attend and vote on who they want to be on the Board of Directors for the coming year.
DIVIDENDS:
Dividends are payments made to shareholders from the profits (after tax) of a company. They are the return to shareholders for investing in the company.
Dividends are payments made to shareholders from the profits (after tax) of a company. They are the return to shareholders for investing in the company.
RISK, OWNERSHIP AND LIMITED LIABILITY - SUMMARY
FRANCHISE:
A franchise is a business based upon the use of the brand names, promotional logos and trading methods of an existing successful business. The franchises buys the licence to operate this business from the franchisor.
A franchise is a business based upon the use of the brand names, promotional logos and trading methods of an existing successful business. The franchises buys the licence to operate this business from the franchisor.