Types of businesses

• A sole trader is a business owned and controlled by one person
• Sole traders rely on their own saving or bank loans to finance their business
• Sole traders keep all profits
• Sole traders have unlimited liability and are liable for any debt or loss
• In a sole trader business , all decisions can be made by one person without having to consult others
• For sole traders there a heavy workload , long hours and no one to share responsibility with
• It’s hard to raise large amounts of start up capital for a sole trader
• Sole readers are risky to start up because they are more likely to fail than other types of businesses
• Partnerships have 2 - 20 partners
• A partnership is a business set up by the deed of a partnership
• A partner who invests but is not involved in the day to day running of a partnership is called a sleeping partner
• Profits are shared between partners in a partnership
• Responsibilities are shared amongst partners in a partnership
• Partnerships have unlimited liability
• Workload , responsibility and decision making can be shared amongst the partners
• Different partners often bring different expertise , skills and experiences
• Partnerships finance can be raised more easily compared to a sole trader
• In a partnership arguments affecting decisions can happen
• Owners have to be invited to buy shares in a private limited company
• Money earned by a private limited company is called a dividend
• private limited companies have limited liability , meaning an investor can only lose the initial stake if the company goes bust
• A board of directors manages and controls a private limited company
• Shareholders and directors can bring different experience and skills to a private limited company
• The owners of a public limited company are known as shareholders