Ensayo China

THE LEGAL STRUCTURE OF BUSINESS ORGANISATIONS
PRIVATE SECTOR

SOLE TRADER

PARTNERSHIPS

LIMITED

COMPANIES

CO-OPERATIVES

PRIVATE (LTD)

PUBLIC (PLC)

SOLE TRADER - ADVANTAGES
l Easy

to set up –no legal formalities l Owner has complete control – not answerable to anybody else. l Owner keeps all profits l Able to choose times and patterns of working l Able to establish close personalrelationships with staff (if any are employed) and customers l The business can be based on the interest or skills of the owner - rather than working as an employee for a larger firm

DISADVANTAGES OF SOLETRADER ORGANISATIONS
l l l

l l l

Unlimited liability – all of owner’s assets are potentially at risk. Often faces intense competition from bigger firms, for example food retailing. Owner is unable tospecialise in areas of the business that are most interesting – is responsible for all aspects of management. Difficult to raise additional capital Long hours often necessary to make business pay.Lack of continuity – as the business does not have separate legal status, when the owner dies the business ends too.

PARTNERSHIP - ADVANTAGES
Partners may specialise in different areas of businessmanagement l Shared decision making l Additional capital injected by each partner l Business losses shared between the partners. l Greater privacy and fewer legal formalities than corporateorganisations
l

PARTNERSHIP - DISADVANTAGES
l l l

l l l

Unlimited liability for all partners Profits are shared There is, as with sole traders, no continuity and the partnership will have to be reformed in theevent of the death of one of the partners. All partners are bound by the decisions of any one of them. Not possible to raise capital from selling shares. A sole trader, taking on partners, will loseindependence of decision making.

CO-OPERATIVES
l

l l l

All members can contribute to the running of the business, sharing the work load, responsibilities and decision making, although in larger...