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Different forms of business ownership
Three basic types of business ownership
Forms of ownerships and their characteristics
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There are different types of ownership within the business sector.
Sole tradership is when the business is fully owned and managed by one person, though others can be employed to help run the business. As the sole traders only financial income is from the business and/or bank loan, they do not have the resources to expand and cover regional or national areas. These types of businesses are located in the small business sector and usually cover local areas. Such businesses could be hairdressers, corner shops or market stalls etc. Sole traderships have unlimited liability so if the business fails to pay its debts the financial responsibility falls on the owner/s to pay the debts in full even if they have to sell their business, personal possessions and assets.
Another example of business ownership is a partnership. Examples of partnerships used in business are accounting firms and solicitors firms. A partnership has two or more owners. They work, manage and are responsible for the running of the business. Individual partners may concentrate on a certain aspect of the business where they have expert knowledge. As there is more than one owner, larger amounts of capital can be fed into the business via personal funding or bank loans. Partnerships have an unlimited liability.
There are two types of limited companies: Private and public. Shareholders own private limited companies. Members of the public cannot buy the shares and the shareholders cannot buy or sell their shares without agreement from the other shareholders. Family owned businesses or larger businesses such as Virgin would fit into this category. Public limited companies have shares on the stock market and can be bought and sold by any member of the public, this way the company can raise further capital and expand their resources. Tesco and British Telecom are such examples. Both these types of limited companies have limited liability, which means the owners of the business are only liable for the amount they invested in the business (unless the debt is so large that the business has to be sold to repay the debt).
Co-operatives are companies that are owned by a group of people (members) who have shares in the company. Shares can start as little as £1 and each member has a share in the Co-operative. It is the members (shareholders) who finance the co-operative and they control on how the business and profits are run.
Partnership – “A legal entity formed by two or more co-owners to operate a business for profit.” (Longenecker, Petty, Palich, Hoy, Pg. 202) In a partnership, the advantage for the owners is the capability to reduce the workload and the financial burden, especially if each partner has management skills that enhances the business. The disadvantages of a partnership such as personal conflicts and leadership expectations, therefore this organizational form should only be chosen once all other options have been considered.
A sole trader is a one man business. There is just one manager. Although they are the sole manager and owner they can employ staff to work for them. They can employ as many as they want to work for them. A sole trader is self employed, this means they work for themselves, they employed themselves, they for nobody. Sole traders trade with others. They may trade expertise, an example of this would be a business consultant taking on a big job and needing an extra hand just for that job, so this person may employ a person with the expertise he/she needs. Because a sole trader is the sole owner he/she keeps all the profits, unless he/she has any employees. The owner of the business makes all the decisions, he/she will not have anyone telling them what to do. When one wants to set up a sole trader business it is relatively easy. There is little paper work involved bec...
Limited companies are owned by shareholders. These are people who own shares in the company. Shares are the parts into which the value of the company is divided. So if a business is valued at £100 million and there are 200 million shares, each share will be worth 50 pence.
The co-operative business group first objective is to maintain the continuous improvement of business and achieve the target productivity. Because the co-op is owned by members of this group, so it serve their food for the members where profit maximization is not the main issue. All of the members and manager of co-op try heartily to improve e their business. The management of this business ensure to maintain the target productivity for the people.
One hundred and fifty four years later Boots now owns 700 retail units which have a value of £740 million and a gross income of about £900 million. The Boots organisation is a public limited company (PLC); Boots is a company run by a set of directors and a chairman for investing shareholders. Boots has its shares bought and sold at the Stock Exchange. By this it is open to anyone who trades in this market. When dealing with shares the organisation can issue different types of shares called preference and debenture shares.
Exploring the Types of Business Organisations There are two Business Sectors: Public Sector These are businesses owned and run by the government. Some examples of Services provided in the public sector are the postal service, schools, colleges, housing environment, some bus and train services, fire, police, ambulance and local justice and social services. Their method of raising capital is different as Private Sector businesses have to raise their own capital e.g. their own money, a bank loan etc. The Public Sector business can get the money required from the Treasury or from local rates.
Unlike a sole proprietor or S Corps, an investor can transfer or give their shares in the company to whomever they choose. Control: C Corp is controlled by its shareholders, Board of Directors and corporate officers. Profit Retention: shareholders share the profits of the company by way of dividends. Location: A C-corp has annual state filings that must be maintained and each state requirements C-corporations must adhere to federal and state guidelines and expansion into other states requires legal filings in that state to operate and maintain a business presence. Beatty & Samuelson, 2007, pp.
Now, Tesco as become more widely popular overtime in the UK since it was first invented and has since
There are many different types of business structures, but if you own and operate a business that it is a sole
A Sole Trader is a business that is owned by only 1 person. They are
In addition, a company can be classified as limited by guarantee or limited by capital shares which are in most companies’ favour. These are governed in the main by the Companies Act 1985 and relevant case law. Introduction There are several types of company. The most common company is a limited company, the liability of the members being limited to the amount they have previously agreed. According to Denis Keenan (1996), a corporation is a succession or collection of persons having at law an existence, rights and duties, separate and distinct from those of the persons who are from time to time its members.
Before a partnership formation is imminent, the business needs to decide on which type of partnership to form. There are three types of partnerships: (1) general partnerships, (2) limited partnerships, and (3) joint ventures. All three partnerships contain two or more owners, but all partners assume equal division of ownership, liabilities, and profits in a general partnership. Limited partnerships offer limited liability protection based on each partner’s contribution percentage. Joint ventures are classified as general partnerships with limited existence periods. Once a type of partnership has been determined, the business fulfills a series of requirements before the partnership can be successfully formed. The first step is to register
Owning Your Own Business There are many advantages and disadvantages when owning your own business. When you own your own business, it’s known as a sole proprietorship. But with any type of business, there will always be advantages and disadvantages. Five advantages to owning your own business are: 1) The owner receives all profits, meaning that all earnings go to the sole proprietor, or the owner, and isn’t shared with anyone else.
The definition of a sole proprietorship is essentially a business that is run by one person and owned by that person as well. Specifically, a sole proprietorship is separated from the other business entities because of the specific the legal dynamics between the business and the owner of the business. Moreover, because of this factor, sole proprietorships are usually easy to both form, maintain as well as dissolve if need be. In a New York Times article, the authors expressed that small businesses are typically sole proprietorships and as such, this is why it was selected as the business entity (1). Furthermore, the aforementioned reasons allowed for a rather rapid decision on the basis that with this entity, there is an ability of the owner to run it how they see fit.
most sole proprietorships operate on a small scale, the main factor that distinguishes a sole proprietorship is the sole responsibility of ownership and decisions.