It is vital for a potential business investor, to analyse the different business structures available in the UK, so that they can choose the structure that is most appropriate for their business needs or goals, while also considering the legal and financial ramifications of each. There are three basic business organisations in the UK, with each having their individual features, merits and demerits. The structure an investor will choose depends on factors such as the size of the business, available capital and liability of its members.
A sole proprietor is an individual carrying on business alone without having registered a single member company. Unlike companies, there are fewer controls on the setting up of sole proprietorships and they usually governed by the general law of contract. A sole proprietor unlike other business forms, can use business funds in any manner due to their high level of autonomy. It is an adequate structure for a single person with capital but not for large-scale investment.
A successful sole proprietor, may be willing to form a partnership with interested investors to expand the business. There are three main types of partnerships: ordinary partnerships, limited partnerships and limited liability partnerships. An ordinary partnership is governed by the Partnership Act 1890 unless excluded in the partnership agreement, and section 1 of the act defines it as “the relationship which subsists between persons carrying on a business in common with a view of profit”. A partnership does not need to be formal, and can come about by oral agreement or conduct. Unlike companies, partnerships do not have a separate legal personality,Thus assets of the firm are directly owned by the partner...
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Most large companies are public companies, because they can easily raise funds by offering shares to the public or floating them on the stock market. A public company is one whose certificate of incorporation states that it is a public company. It must have PLC at the end of its name. They are subject to more onerous regulations than LTD’s. They must have at least two directors and a company secretary . PLC’s must have at least £50,000 of authorised share capital and cannot start trading without a trading certificate. Also they must hold an annual general meeting; written resolutions cannot be used in a PLC.
After analysing the different business organisations available in the UK, the type an investor would choose, will depend on factors such as the type/scale of business, its financial obligations, privacy and the liability of its members
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.
Liability – The general partners are all responsible for the debts and obligations of the business, but the limited partners are only liable up to their invested amount.
There are many types businesses in this world; these include Sole trader, Plc, Ltd, Partnership, Co-op and franchise. These types of businesses are all different from each other. Some of them need just one owner, some have hundreds.
Converting a private limited company into a public one has advantages, such as the ability to raise share capital. However, it does have potential disadvantages, such as being subject to the scrutiny of the financial media and city analysts (the company’s financial records must be available for any member of the public to scrutinize). If the founder of a plc perceives the company share price to undervalue the company they may take the company private once more, as Richard Branson did with Virgin in 1989.Selling shares means that you can raise money quickly. A disadvantage of selling shares is that it is very expensive.
And there are some advantages of a public limited company such as there is limited liability for the shareholders which mean the maximum losses that will cause are the amount that the shareholders invested in that company it won’t cause more than that so for the investor the risk is limited. Other than that the public limited company’s potential capital that they can raised is large they can raise fund by selling shares or borrow from bank. Also public limited company is easier to obtain financing because most of the banks and financial institution would like to invest to the larger company just like PLC. PLC have high continuity although the helm of company step down the company can still operating normally because shareholder can transfer their shares to anyone. There are many advantages of PLC but it still have some disadvantages for instance :PLC must make public annual financial report of the company also if the company close the liquidator must be realize the all assets to distribute to all creditors and shareholders. So the owner of Tesco are those people who bought the shares of Tesco. Furthermore, every year Tesco will held the annual general shareholders meeting. Tesco will report the annual accounts, strategic report and directors' report etc. to the shareholders in the meeting. Therefore the shareholders of Tesco can have more information and data to grasp more about
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.
For example, the branches income will be subject to taxes of the country it resides. The branch is an extension and the parent organization and is responsible of meeting the objectives related to customer service and sales. Additionally, the host countries may require that a percentage of the middle and senior leadership team be local citizens and business licenses are time sensitive and must be updated as shifts in business regulations are noted (Pearce & Robinson, 2011, p. 131). Next, equity investments, which are provided by private venture capitalists or firms, are needed to raise money or gain expertise in order to grow the business (Pearce & Robinson, 2011, p. 131). Investors seeking this method only see a return on their investment when they sell their shareholding to other investors or the organization liquidates their assets. In order to make an investment, the venture capitalists will evaluate the firm on the debt to worth ratio (Keythman, 2015). In other words, it a relationship of how much debt will be taken on compared to how much the business is worth as too much debt reduces the value of the owner’s stake. Finally, wholly owned subsidiaries are noted when a company’s stock is 100% owned by another company, whereas a regular subsidiary is 51%-99% owned by a parent company (Schreine, 2015). For
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
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).
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
C, Martin. K, Tyrone. P. (2005) Managing and Organisations an Introduction to Theory and Practice Sage publications Unwinhyman Dictionary of Business --------------------------------------------------------------------- [1] A Huczynski and D Buchanan 2001
There are many advantages and disadvantages when owning your own business. When you own you own business, it’s known as a sole proprietorship. But with any type of business, there will always be advantages and disadvantages.
...s of a partnership are the shared profit factor, which can cause a lot of animosity among the partners if things do not go as well or if there is an unequal amount of contribution among the partners. Additionally, there is both individual and joint liability with partnerships. This can often cause dissention between the partners (“SBA”). Essentially, the sole proprietorship is the best choice because the risks are minimal because it is solely one individual, who can make the best choices and decisions and deal with the consequences that arise accordingly.
most sole proprietorships operate on a small scale, the main factor that distinguishes a sole proprietorship is the sole responsibility of ownership and decisions.