types of businesses

• Sole traders are individuals who run their businesses as the sole owners and operators. They are the most basic and common form of business ownership.
• • a sole trader business is owned and operated by a single individual, who has complete control and decision-making authority.
  • The sole trader and the business are considered as one legal entity, meaning there is no legal distinction between the individual and the business.
  • The sole trader has unlimited liability, which means they are personally responsible for any debts or losses incurred by the business.
  • As the sole owner, the individual has the autonomy to make all business decisions without the need for consultation or approval from others.
• Starting up as a sole trader is legally the easiest of all types of ownership.
• Sole traders keep all the profit they make for themselves.
• Sole traders get to run the business in the way they want to, making all the key decisions by themselves.
• Sole traders are often able to adapt quickly to changing market conditions, customer demands, and personal preferences.
• With sole traders, there are fewer rules and regulations compared with other types of organisations.
• Unlike some other forms of business ownership, sole traders have the advantage of maintaining their privacy as they are not required to disclose financial information or business operations to the public.
• Sole traders take on all the risks of starting and running their own business.
• Sole traders are responsible for all the losses.
• Sole traders are personally liable for the debts of the business, meaning they may have to sell personal assets, such as a house or car, to pay these debts.
• Sole traders are responsible for all aspects of the business's operations, which can result in a heavy workload, long hours and increased responsibility.
• There’s nobody else to share the full burden of responsibility for their business.
• Compared to other types of businesses, sole traders can only raise limited finance, potentially leading to problems if they want to expand or grow the business.
• • Partnerships are business organisations formed by two or more (up to 20) individuals who agree to jointly operate a business with the goal of making a profit. These individuals, known as partners, contribute resources such as capital, expertise, or labour to the business.
  • Partners in a general partnership have joint and several liability, meaning that each partner is individually liable for the partnership's debts and obligations.
  • The profits and losses of the business are typically shared among the partners according to the agreed-upon partnership agreement.
• Partners can share the workload and responsibility of the business between them.
• Partners can also share the financial risks of the business, reducing the burden on individual partners.
• A sole trader has no-one with whom to share their workload and responsibilities.
• Partnerships enable the division of work and responsibilities among the partners based on their strengths and expertise.
• A partnership running a software company might have some partners who are excellent programmers, while other partners may have excellent sales or marketing skills.
• Partnerships benefit from the collective wisdom and diverse perspectives of the partners in making key business decisions.
• This is more likely to lead to better decisions being made.
• Partnerships can benefit from pooling together financial resources from multiple partners which means they can raise more finance than sole traders.
• Banks are more likely to lend money to an organisation that has many partners than to a sole trader.
• Profits in a partnership are shared between 2 to 20 people, with the sole trader having the advantage of receiving all profit.
• Partners in a partnership may disagree and argue about the future direction of their business, making it hard to make decisions.
• Partners in a partnership have unlimited liability for the debts and obligations of the business, meaning each may have to sell personal assets, such as a house or car, to pay these debts.
• Disagreements or conflicts among partners regarding decision-making, profit sharing, or business direction can arise in a partnership, potentially impacting the partnership's operations.
• Although partnerships can typically borrow more money than sole traders, they may find it difficult to raise large amounts of finance compared with companies.
• Private limited companies are business entities that are privately owned by shareholders and are separate legal entities from their owners.
• The number of shareholders in a private limited company is limited, and shares are not publicly traded on the stock exchange.
• The management and decision-making of a private limited company are typically delegated to the directors appointed by the shareholders.
• Major decisions in a private limited company are often made through resolutions passed by the shareholders or the board of directors.
• Private limited companies have shareholders who contribute capital to the company by purchasing shares, and their ownership and control over the company are proportionate to their shareholding.
• Shareholders in a limited company have limited personal liability, protecting their personal assets from business debts and obligations.
• If the company fails, the investors in a limited company are protected, so that they only lose their original investment (the share capital) and are not personally liable for the debts of the business.
• Limited companies are able to raise money by borrowing and through the share issue of ordinary shares.
• This means they have more options for raising funds than sole traders and most partnerships.
• • The legal set up costs of setting up and running a company can be expensive, involving lawyers and accountants.
  • While private limited companies enjoy privacy, certain information such as financial statements need to be disclosed to regulatory authorities and made public.
  • Because profits are only shared with shareholders it can be harder to motivate employees who do not hold shares.
• • The UK Government is based in Westminster. Matters which are run by the UK Government include economic policy, defence, international relations. UK government also runs public corporations such as the BBC.