Forms of businesses

• Unincorporated


  • legal difference between the company and owners
  • company has separate legal identity
  • owners have limited liability
  • most uninc. businesses operate as sole traders
• Incorporated


  • unlimited liability - business owners are responsible for the debts of the business
• Sole traders (uninc.)


  • one owner
  • employees don't share ownership
• unlimited liability


  the owners are responsible for all of its debts if the company fails

  • assets can be seized and sold to pay off the debt
• limited liability


  shareholders are only liable for the money they have put into the business
• advantages of sole trading


  • quick and easy to set up
  • decisions are quick as owner has complete control over decision making
• disadvantages of sole trading


  • unlimited liability (have to pay out of pocket if in debt)
  • hard to raise finance
  • the business suffers if owner is ill
  • higher tax rate
• features of a limited company


  • companies are owned by their shareholders
  • shareholders own a share, not assets
  • the company owns the assets and pays the debts
  • private limited = shares are given to those who are INVITED
• advantages of operating as a limited company


  • limited liability
  • easier to raise finance
  • stable form of structure
• disadvantages of operating as a limited company


  • greater admin costs
  • public disclosure of company information
• public limited companies


  • shares may be traded on a public stock market
  • have a lot more shareholders
• Not-for-profit organisations

  • businesses that trade to benefit the community
  • has social aims alongside earning money
  • social aims include job creation, fair trade
  • social enterprise include housing assoc.