Types of Business Entities

Created by

ceylin

Cards (24)

Private Sector 
portion of economy owned by private individuals
Public Sector 
portion of economy owned by the government
Features of the private sector 
private ownership and control
little or no government involvement
profits can be earned by owners
Features of the public sector 
owned and controlled by the government
financed by government
provides essential goods and services
answerable to the public for any decision taken
Nationalisation 
private companies become owned and controlled by the government
Privatisation 
government business transfer ownership to private sector
Unincorporated- Sole Traders 
business is owned and run by one person

no legal separation between owner and business
easy to set up
keep all the profits
savings are often used to start up
no legal continuity

- the failure of the business is the responsibility of sole trader (unlimited liability)
- difficult to finance
- no separate business personality
Unincorporated- Partnership 
a form of business where two or more people share ownership, responsibility and income or losses

no legal continuity
unlimited liability

+ shared ideas and experiences
+ specialisation
+ shared capital
+higher continuity
+ privacy of financial records

- disagreements
- interdependency
- shared profit
Deed of partnership 
amount of money put in by each parter
sharing of profits and losses
roles and responsibility
procedure of ending partnership
rules of accepting or withdrawing a partner
Incorporated- Limited Company 
a company is a business organisation which has its own legal identity and limited liability
Shareholders 
people or organisations that own a part of a company. Each share is a part ownership of the business
Private Limited Co.- Features 
owners can restrict who the shared are sold to in to future
not traded on stock exchange
Public Limited Co. - Features 
shareholders can share their shares to whoever
traded on stock exchange
shares may be advertised (IPO)
must publish financial reports
Limited Liability 
owners are not responsible for depts if business fails (owner and business are legally separated)
Dividens 
a portion of business profits distributed to owners or shareholders
Private Limited CO. 
privately owned often family and friends as shareholders, the shares are not sold to public and not on stock exchange

+ no obligations to publish financial records
+ limited liability
+ legal continuity
+ control and owner ship

- business cannot be examined by external experts
- expensive
- lengthier decision making
Public Limited Co. 
a company that is publicly owned, has many shareholders who can buy and sell shares in the stock market

+ finance- money can be raised by shares
+ separate legal identity
+ limited liability

- loss of control
- public financial records
- high costs to set up
Social Enterprise 
a business that put the interest of people and planet ahead of shareholder gain
For-Profit Social Enterprise- Features 
profit making business
integrates social/environmental impact
judged less on profits and more on multi stakeholder impact
most profits are reinvested into business
Evaluation of For-Profit Social enterprise 
+ meeting their ethical responsibilities
+ generate revenues and profits
+ attract increasing number of customers

- Funding
investor need to wait longer for returns, lower return
- Credibility
- Measuring Impact
Non-Profit Social Enterprise 
any surplus generated must be reinvested in the business
have to prove social and environmental purpose to governmnet
NGO's 
a legally constituted body with no participation or representation of any government which has a specific aim
Charities 
an organisation set up to raise money to help people in need
Cooperatives 
business that is owned and run by its members