1.3 Business Ownership

• Advantages of a sole trader:


  • Easy to set up
  • Little finance required
  • Full control
  • Keep all the profits
  • Financial information is private
• Disadvantages of a sole trader:


  • Unlimited liability
  • Business stops if ill or on holiday
  • Long working hours
  • Shortage of capital
  • Skills shortage
  • No continuity after death
• Advantages of a partnership:


  • More capital available
  • Easy to set up
  • More skills available
  • Shared workload
  • Financial information is private
• Disadvantages of a partnership:


  • Shared profit
  • Unlimited liability
  • Shortage of capital
  • Slower decision making
  • No continuity after death
• Advantages of Private Limited Companies:


  • Limited liability
  • Continuity
  • Can raise more capital easily
  • Control over share sale
• Disadvantages of Private Limited Companies:


  • Financial information available to the public
  • Complex and expensive to set up
  • Sale of shares is restricted
  • Dividends to be paid
• Advantages of Public Limited Companies : 


  • Can raise larger amounts of capital
  • Easier to borrow money
  • Limited liability for shareholders
• Disadvantages of Public Limited Companies :


  • Possibility of a takeover
  • Complex and expensive to set up
  • Hard to manage as so large
  • Financial information available to the public
• Sole trader examples:


  Electricians, plumbers, hairdressers
• Partnerships examples:


  Solicitors, accountants, dentists
• Shareholders:


  Owners of a LTD/PLC

  Invest money so has a share of the business
• Director


  Run and make decisions in the business
• Dividends 


  Amounts of money paid to shareholders from profits of the business
• Deed of partnership 


  A document setting out the operations of a partnership
• Sleeping partner


  Someone who only invests in a partnership