Sole Traders

Regulations:

• Registration and Annual Accounts to Tax Office
• Register with Registrar of Business Names
• Must follow laws

Advantages:

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

Disadvantages:

• 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

Partnerships

• An association between 2-20 people who agree to run a business together

Regulations:

• Verbal agreement
• Partnership Agreement/ Deed of Partnership

Advantages:

• More capital
• Responsibilities shared
• Motivation
• Shared losses

Disadvantages:

• 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

Regulations:

• Contracts and legal agreements allowed
• 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.
• 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.
• Must have shareholders

Advantages:

• Shares generate more capital
• Limited liability
• Incorporated company
• Control isn’t easy to lose

Disadvantages:

• 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

Regulations:

• Statement must be made in Memorandum of Association
• Minimum value of shares must be sold [50,000 pounds]
• Accounts must be made public
• Must apply to stock exchange
• Must issue a prospectus (detailed document with business details)

Advantages:

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

Disadvantages:

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

Control:

• Everyone is invited to the Annual General Meeting
• Company directors have a major impact
• They all decide on Board of Directors
• There may be a divorce in ownership and control
• Managers/directors control, shareholders own

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

Regulations:

• Founding statement sent to Registrar of Companies

Advantages:

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

Disadvantages:

• 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

Advantages:

• Cost sharing
• Local knowledge used well
• Shared risks

Disadvantages:

• Different cultures
• Disagreement over decisions
• Profits shared

Franchising

• Business that shares its identity and methods for a price