4. types of business organisation

• sole trader is business owned by one owner
• advantages of sole trader:

  cheap and easy to start up

  full control of your own business
• disadvantages of sole trader:

  unlimited liability

  if the owner dies the business no longer exists

  less money difficult to expand
• partnership: business owned by two to 20 people
• Advantages of partnership:

  • Share losses, tasks, costs
  • more money can be invested
  • more ideas
• Disadvantages of partnership:

  • profits have to be shared
  • arguments/disagreements can occur
  • unlimited liability
• unincorporated business -a business that does not have a separate legal identity from its owner if the business is sued the owner is responsible and may need to cover the cost with their own personal money
• Incorporated business that has a separate legal identity for its owner if the business goes bankrupt the owner still won't be held responsible and only lose the money invested
• unlimited liability means if the business fails, the business goes in debt, pay back with their own money, limited is the opposite of it
• LTD or private limited company is a business owned by shareholders that has limited liability and cannot sell shares to the public

  PLC or public limited company is similar but can sell shares to the public
• Advantages of LTD:

  • limited liability
  • can be invested by many shareholders
  • cheaper to set up than PLC
  • continuity
• Disadvantages of LTD:

  • slower to start up(sign legal docs)
  • can only sold to family and friends
  • other shareholders need to agree before shares can be sold
• Advantages of PLC

  • limited liability
  • continuity
  • grow, expand quickly
• Disadvantages of PLC:

  • complicate legal docs
  • expansive to start up
  • grow large quickly = hard to control
  • Original owners can lose control of the company
• PLC is in the private sector with shares owned by private individuals
• franchise is a business use of brand names, promotional logos and trading of existing successful businesses, franchisee buys license to operate
• advantages of franchisor:

  • expansion faster
  • all products sold are obtained from the franchisor

  Disadvantages:

  • poor management = bad reputation
  • franchise keeps profits from the outlet
• advantages of franchisee:

  • failure reduced because the well-known products being sold
  • franchisor pays advertisement
  • fewer decision
  • training provide

  Disadvantages:

  • poor management = bad reputation
  • franchise keeps profits from the outlet