You are on page 1of 9


Organisation : This is a social arrangement for the controlled performance of a collective goal {Buchanan and Huczynski} synergy : These means that what one person can do for years two or more people can do it in a day { 2+2 = 4} companies and partnership are seen as a profit seeking organisation because their objective is to make profit

COMPANY AND TYPES A company consist of two or more people, incorporated as a registered company, who become its shareholder and who appoint directors to manage the company and act as it agent. TYPES: Limited company {Ltd} Public limited company {plc}

Public limited company: These are organisation that offer shares to the public at large through the medium of the stock exchange Limited company: These are organisation that do not offer its shares to the general public company cannot commence business until these formalities are completed. These include: A certificate of incorporation from the registrar of the companies Compliance with the companies act 1985 The business name act 1985

Advantages of a limited company Separate legal entity: A limited company has a legal existence separate from management and its member (shareholder) Members liability is limited: The protection given by limited liability is perhaps the most important advantages of incorporation, members only loss the value of the shares and any loan made to the company

continuity : A company has everlasting life, directors, management and employee act as agent of the company. If they leave, retire or die the company still remain in existence.

Taxation : sole trader and partnership pay income tax while company pay corporation tax on taxable profit.

Disadvantages of a company
Cost : The limited company is more expensive to set up Complex account: Their account is more complex and restrictive to it rule. Restrictive capital raising: for private limited companies, there is a restriction on the raising of capital through sales of shares. Conflict: potential friction as share holders are involve in the decision making process.

A business that is co-owned by two or more people is referred to as partnership. The co-owner of the business are called partners. Types General partners Limited partners General partners: These consist of two or more partners that have unlimited liability. That is, the partners are personally liable for all obligation of the firm. Limited partners: These partners liability is limited to the cash or property they contribute to the partnership.

Advantages Additional funding: more partners are there to finance the business operation. losses are shared: Any business losses the partnership incurs are spread across all of the partners. more specialisation: with a partnership, partners can focus on their respective specialisation and serve a wild verity of customers.


Share of profit: Any profit that the partnership generate must be shared among all partners Unlimited liability: General partners in partnership are subject to unlimited liability. control is shared: The decision making in partnership must be shared, if the partner disagreed about how the business should be run, business and personal relationship may be destroyed.