1.4

• Private Sector Business Types


  • Sole Traders
  • Partnerships
  • Limited Liability Partnerships
  • Private Limited Companies
  • Public Limited Companies
  • Cooperatives
  • Close Corporations
  • Joint Ventures
• Sole Traders


  • Few legal regulations
  • Full control
  • Freedom to choose
  • Flexibility
  • Fast response to demand
  • Close to customers
  • Keeps all profit
  • Secrecy
• Sole Traders


  • No one to discuss with/no advice
  • Unlimited liability: owners held responsible for debts of company
  • Limited sources of finance/capital
  • No specialization
  • Lack of efficiency
  • Less chances of growth
  • No continuity of business- unincorporated business
• Sole Trader Regulations


  1. Registration and Annual Accounts to Tax Office

  2. Register with Registrar of Business Names

  3. Must follow laws
• Partnerships


  • An association between 2-20 people who agree to run a business together
  • More capital
  • Responsibilities shared
  • Motivation
  • Shared losses
• Partnership Regulations


  1. Verbal agreement

  2. Partnership Agreement/ Deed of Partnership
• Partnerships


  • Unlimited liability
  • Unincorporated business (no separate legal identity)
  • Risk of disagreement
  • Limited number of partners
  • Dishonesty/ inefficiency
• Limited Liability Partnerships


  • Limited liability
  • Incorporated business
  • Shares cannot be bought and sold
• Private Limited Companies


  • Contracts and legal agreements allowed
  • Shares generate more capital
  • Limited liability
  • Incorporated company
  • Control isn't easy to lose
• Private Limited Company Regulations


  1. Articles of Association: rules under which the company will be managed. It states the rights and duties of all the directors, the rules concerning the elections and the procedure for the issuing of shares.

  2. Memorandum of Association: consists of the information regarding the company and the directors. Must have the name, address, objectives, amount of share capital and number of shares.

  3. Must have shareholders
• Private Limited Companies


  • Many legal matters
  • Shares cannot be sold without the agreement of all shareholders
  • Less secrecy
  • Shares cannot be sold to general public
• Public Limited Companies


  • Limited liability
  • Incorporated business
  • Much capital available
  • No limit to number of shareholders
  • No restrictions on selling of shares
  • High status
• Public Limited Company Regulations


  1. Statement must be made in Memorandum of Association

  2. Minimum value of shares must be sold [50,000 pounds]

  3. Accounts must be made public

  4. Must apply to stock exchange

  5. Must issue a prospectus (detailed document with business details)
• Public Limited Companies


  • Legal formalities
  • Regulations and controls
  • Difficult to control and manage
  • Expensive to sell shares
  • Loss of control possible
• Cooperatives


  • An autonomous association of persons who voluntarily cooperate for their mutual social, economic, and cultural benefit
  • Group of people who agree to work together and pool their resources
  • All members have one vote, despite the number of shares
  • Workload is shared equally
  • Profits are shared equally
• Types of Cooperatives


  • Producer Cooperative: group of workers who design and produce
  • Retail Cooperative: aim to provide their members with goods at good quality and good price
• Close Corporations


  • Similar to Private Limited Companies
  • No separation of owners and control
  • Limited liability
  • Continuity- incorporated business
  • Less regulations than Private Limited Companies
  • Quick to set up
• Close Corporation Regulations


  Founding statement sent to Registrar of Companies
• Close Corporations


  • Limited to ten people
  • Not suitable for large businesses
  • Members may disagree over decision-making
• Joint Ventures


  • Two or more businesses agree to start a project together
  • Cost sharing
  • Local knowledge used well
  • Shared risks
• Joint Ventures


  • Different cultures
  • Disagreement over decisions
  • Profits shared