forms of ownership

• form of ownership

  refers to the legal position of the business and how its owned
• sole trader

  owned and managed by one person.assets and profits belong to owner.legally no seperation between businesss and individual running it.if facing legal action owner is legally responbile
• advantages of sole trader


  owner can start doing business anytime they want to. business run as owner sees fit. Assets and profit belong to the owner.can easily adapt to customers' need
• disadvantage of sole trader

  owner contributes their skill,time and energy.business cannot continue if owner dies or retires.capital is limited to the amount the owner has acess to
• partnership


  is an agreement between two or more people.each contributes to the company.no legal requirements regarding the name.the auditing of financial statments are optional
• advantages of partnership

  can deal wit problems together.can easily come into exsitence and easily share resources.contribute new skills and ideas
• disadvantages of partnership

  Don't always agree and slow down decision making. bad decision by one can cause losses for both.must dissolve if one dies or retires.profits must be shared with others
• closed corporation

  appropriate for small businesses.are legal entities and have legal rights.close means all members are involved in managment.name ends with"cc"
• advantage of closed corporation

  few legal requirements.is a legal entity and has a continuity of existence. members have limited liability.can be converted into private company . members turn into shareholders
• disadvantage of closed corporation

  limited growth and expansion,as they cannot have more than 10 members.taxed as a company , higher than personal tax. taxed on its income and sti based on members dividend leds to double taxation
• private company

  requires one or more shareholders and directors.is not bound to publish a prospectus when issuing shares.Don't offer securities to public .investors put capital to earn profit
• Advantages of private company

  More capital raised by company than individuals. Auditing of financial statements are voluntary. More opportunity to pay less tax. Good long term growth opportunity.
• Disadvantages of private companies.

  Restricted from raising funds directly from public. Costs and formalities are associated with forming a company. More taxation requirements.directors don't have personal interests
• personal liable company

  one or more persons including justice people may incorporate persons liable company.has the benieft of coprate exsistence and perputal.is identified by"inc".annual financial statements need not to be audited ,unless prescribed by regulation
• advantages of personal liable company

  the board must consist of one director.the lifespan of pic is continous.directors not compelled to attend annual general meeting.are subject to low disclosure and transparencies.
• disadvantages of personal liable company

  Pays tax on profits and declared dividends is subject to double taxation. Directors of PLC have unlimited liabilities. Resttricted from making funds directly from public. Cost and formalities associated.
• Public Company

  A minimum of one person to start. Company may end with LTD. As legal personality therefore unlimited continuity, Raises capital by issuing shares to public.
• Advantages of public company

  Businesses have own legal entity, can own assets and property. Shareholders have liability. Strict regulatory requirements protects shareholders. No limitations of number shareholders.
• Disadvantages of public company

  Complicated process to start. Must appoint auditor, audit committee and company secretary. Large amount of funds spent on financial audits stocks traded publicaly.
• State owned company

  Needs three or more directors. Needs one or more shareholders. Registers with the registar of companies by drawing a memorandom of incorporation. Own by goverment runs for profit. SOC is listed as public company.
• Advantages of SOC

  Funds used to finance other departments. Offer a essential services. Crisis kept reasonable. Wasteful duplication of services eliminated.
• Disadvantages of SOC

  Inefficiency due to size. Often rely on government subsidies. Loses met by tax payers. Financial statements must be audited.
• Non profit Organisation

  Do make money, not a profit. Money raised covers expenses. Name must end with " NPC "
• Advantages of NPC

  Assets in name of company and not members. Continue even if members change.
• Disadvantage of NPO Need professional assistance to start. Dont make enough to cover costs. Donations not always enough. Assets not distributed when closing are Don't.