Limited company

Public (plc)

Doing business:
arrangements:
premise
bussines liences
partnership company-> deed of agreement, clarify the capital contribution(money) +
profit sharing ratio( earn sharing) and the management role

Sole Trader/Proprietorship
where provides its only need
-Provide capital
-Decision making
-bearing all the business risk (legal responsibility) (not a legal entity)

With you unlimited liability -> use your personal property to settle the firm debt

- Elaboration (aim/purpose, Structure)

-Features
-Example
(Don’t need a strict definition)

Sole proprietorship.
-Provides the capital
-bear the risk
-not a legal entity. (company)
—> Liable for all charges incurred

-Unlimited liability.(owner)
—>liability not limited to ignited investment

Limited continuity.
—>Business Registration-> Done:

-Lower tax than limited companies

-Accounting into can be kept secret

-close relationship with customers

-limited source of capital

Partnership.
- > 2 partners (Two or more people)
Share the capital investments
Shared responsibilities (still have unlimited liability)

-Unlimited Liability

-limited continuity

-Collective responsibility

-simple set up procedure

-lower tax rate

-Limited source of capital

-Accounting information can be kept secret.

1. work incentive
2. Relationship with customer/ employee
3. Set up produce
4profit tax rate.

4 types of company
Sole trader
Partership Nor

private limited company

public

Separation of ownership and management:

Private limited company:

What is private limited company? (有限公司)

-Ownership of the company is divided into small units called shares
-These shares cannot be bought by the general public
-The person owning more than 50% of the shares have complete control
-The corporate tax (Business) for a plc is 16.5%(to government) rather than < 15%
for individual tax rate
-There are more legal procedures to follow e.g. Keeping minutes for board meetings,
submitting audited account to the IRD

-Owned by shareholders
-The crew too limited company to rase capital
-Cannot sell shares to general public
-The shares will be owned by the original sole trader may hold a majority of the
shares to keep control of the company

Liability
Limited- The only liability is the amount invested should the firm fails
implication:
- People are willing to finance the company
- the risk of failing now shifts from

1. Power of management- Depending on the % of share your retain, your role will
change from being a sole proprietor to becoming a mere shareholder or/ and
director/manager.You may not longer be able to make key decision for your
company(-)

2. Limited liability- Either as shareholder or a director, you are not personally

responsible for any liability incurred by the company.(+)

2.Tax rate- Higher tax rate (16.5%) (-)

3. Legal procedures- more complicated and costly (-)
4 Capital- You can now raise more capital for expansion (+)

Legal personality (Legal litany)

Raw product sold by a company are found to be dangerous of family
Would be the case with enter a sole trader or partnership
Company will bear the risk not the person

Public limited company (Plc)

-With the legal rights
-Sell shares to the general public