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  • Business Bridging Work I

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    This document outlines and compares several common legal structures of business, including sole traders, partnerships, limited liability partnerships, private limited companies, public limited companies, community interest companies, charities, and mutual organizations. It describes the key characteristics, advantages, and disadvantages of each structure. Sole traders have unlimited liability but full control, while partnerships spread risk across owners but require shared decisions. Limited liability structures like limited partnerships and private companies reduce personal risk but involve additional costs and procedures. Public companies have greatest access to capital but are more difficult to manage. Charities and mutual organizations have specific purposes and restrictions but can access dedicated funding sources.

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    This document outlines and compares several common legal structures of business, including sole traders, partnerships, limited liability partnerships, private limited companies, public limited companies, community interest companies, charities, and mutual organizations. It describes the key characteristics, advantages, and disadvantages of each structure. Sole traders have unlimited liability but full control, while partnerships spread risk across owners but require shared decisions. Limited liability structures like limited partnerships and private companies reduce personal risk but involve additional costs and procedures. Public companies have greatest access to capital but are more difficult to manage. Charities and mutual organizations have specific purposes and restrictions but can access dedicated funding sources.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    6 views2 pages

    Business Bridging Work I

    Uploaded by

    ansarianeesa16
    This document outlines and compares several common legal structures of business, including sole traders, partnerships, limited liability partnerships, private limited companies, public limited companies, community interest companies, charities, and mutual organizations. It describes the key characteristics, advantages, and disadvantages of each structure. Sole traders have unlimited liability but full control, while partnerships spread risk across owners but require shared decisions. Limited liability structures like limited partnerships and private companies reduce personal risk but involve additional costs and procedures. Public companies have greatest access to capital but are more difficult to manage. Charities and mutual organizations have specific purposes and restrictions but can access dedicated funding sources.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    Legal structures of business

    Sole traders:
    Characteristics:
    - Owned by one person
    - Unlimited liability
    - Full control
    - Continuity
    Advantages:
    - 1. You don’t need to share profits with other partners.
    - 2. Make your own decisions these don’t have to be shared with other partners.
    - 3. Quick decision making. You don’t have to discuss major decisions with other partners.
    Disadvantages:
    - 1. Unlimited liability
    - 2. Difficult to raise finance (less internal investors)

    Partnerships:
    Characteristics:
    - 2-20 owners
    - Unlimited liability
    Advantages:
    - 1. Spread the risk across more people
    - 2. Share workload
    Disadvantages:
    - 1. Might fall out with partner
    - 2. Decisions take longer compared to sole trader

    Limited Liability Partnerships (LLPs):


    Characteristics:
    - One or more members
    - Limited liability
    Advantages:
    - 1. Liability protection to individuals within the group as it’s a separate legal entity
    - 2. Business is easy to establish and start up costs are low
    - 3. More capital is available for business
    Disadvantages:
    - 1. Public disclosure
    - 2. Profit can not be retained in the same way as a company limited by shares

    Private limited companies:


    Characteristics:
    - Minimum of 2 members
    - Limited liability
    Advantages:
    - 1. Reduced risk of person-ability
    - 2. Additional capital can be easily raised by selling more shares
    - 3. Wider ownership and reduced risk
    Disadvantages:
    - 1. Initial costs for a Ltd company can be higher
    - 2. Loss of control
    Public limited companies:
    Characteristics:
    - One or more multiple people
    - Personal liability
    Advantages:
    - 1. Access to capital
    - 2. Better access to credit and limited liability
    Disadvantages:
    - 1. Difficult to manage
    - 2. Financial burden and misuse of power

    Community interest companies:


    Characteristics:
    - Limited liability
    - Two or more people
    Advantages:
    - 1. Limited liability and protection
    - 2. Quicker to set up and access money through private donors
    Disadvantages:
    - 1. Community funding way not be as widely available
    - 2. Limited tax relief

    Charities:
    Characteristics:
    - Public benefit
    - One or more people
    Advantages:
    - 1. Tax relief on surpluses and donations
    - 2. Access to funding only available to charities
    Disadvantages:
    - 1. Trading, political and campaigning activities are restricted
    - 2. Imposes high standards of regulation and bureaucracy.

    Mutual organisations:
    Characteristics:
    - Owned exclusively by its customer
    - Limited liability
    Advantages:
    - 1. No external shareholders to pay in the form of dividends
    - 2. Does not seek to make large profits of capital growth
    Disadvantages:
    - 1. The customer bases the same so there’s a reduced number of availability

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