Private Sector

Sole Traders


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


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


  • 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


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


  • Verbal agreement
  • Partnership Agreement/ Deed of Partnership


  • More capital
  • Responsibilities shared
  • Motivation
  • Shared losses


  • 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
  • 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


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


  • 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


  • 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)


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


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


  • 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


  • 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


  • Founding statement sent to Registrar of Companies


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


  • 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


  • Different cultures
  • Disagreement over decisions
  • Profits shared


  • Business that shares its identity and methods for a price
AdvantagesSells brandExpansion is faster

No responsibility of management

Franchisee forced to buy everything from him

Less chances of business failureFranchisor pays for advertisement

All supplies bought from one supplier

Fewer decisions to be taken

Training provided by franchisor

Banks willing to lend

DisadvantagesPossibility of bad reputationFranchisee keeps profit of his branchLess independenceUnable to make decisions that would suit local taste

License fee and percentage of turnover must be paid to franchisor


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