I'm going to explain diferent forms of business ownership and his advantages and disadvantages.
In the private sector (business activity owned financed (not always) and controlled by private individuals).
We have diferent forms of business such as:
-Sole Traders
-partnerships
-Private Limited Companies
-Public Limited Companies
-Co-operatives
-Franchises
-Charities
Now, I will try to explain simply one by one that diferent forms of business.
The Sole Trader is owned, financed and controlled by one person but can employ other people, that kind of business are very common for, bakers, shoemakers etc.
They have some advantages and some disadvantages, the advantages are:
1) Easy to set up, because the laws make easier to set up a sole trader rather than a big company.
2) Personal incentive like, keep all the profits (sometimes this could be a disadvantages), make key decisions you are the owner so you have to make the important decisions about your business, high degree of control, you are the chief, so, You control all departments.
And in my opinion this are the more important disadvantages of a Sole Trader:
1) Unlimited Liability, that means that you can't separate your personal propierties in front of your business obligations, for that reason you can lose everything, like your car or your house.
2) Limited access to capital, normally the banks aren't going to trust in your capacity to return the loans.
The Partnerships are owned, financed and contolled by upwards of two partners, with a contract, the common business are, lawyers, accountants, architecs etc.
Some advantages are:
1) Greater access to capital
2) Shared responsibility
3) Since 2001, Partnerships can apply to be Limited Partnerships
The disadvantages are:
1) Unlimited Liability (look point 3 of Advantages).
2) All partners liable for the debts of the others, in partnerships you are member of a team so you have to support the others.
3) Potential for conflict, sometimes is difficult to make a decision together, a solution normaly is, one person one vote.
4) Decisions of one partner binding on the rest (look point 3 of disadvantages, one person one vote).
Diferences between Private Limited Company (from now Ltd) and Public Limited Company (from now PLC)
With Ltd the number of shareholders is set between 2 and 50, but in PLC you haven't got a maximum number of shareholders.
PLCs shares traded on Stock exchange.
LTDs shares only bought and sold with agreement of existign shareholders.
Common characteristics:
That companies are more complex to set up.
Minimum share capital of 50000€.
Must have a memorandum of association that details the nature, purpose and structure of the company.
Divorce between ownership and control, you can be the owner but maybe you think that other person can manage your company better than you, so in that case you are the owner but not the manager.
Must publish accounts.
Franchises: Is a type of business ownership backed by established a brand name, like Mc'Donalds, Vodafone, Orange, MRW, Zara etc
Normally the owner gets to run a business with less risk, because the business is normally well known.
You don't have to make advertisings because the company makes that for you
The owner buys the right to use the company name, and in order to pay you have to give the 20%,30%,35% even 40% of your profits.
Co-operatives:
This companies exists for the benefit of the members.
There are three diferent types of co.operatives.
1) Consumer co-ops: The members buy the goods in bulk in order to archieve a better price
2) Worker co-operatives: Workers buy the business and take care of the co-operative, the decisions and the profits or losses are shared by the members.
3) Producer co-operatives: Producers organise distribution and sale of products themselves.
In the private sector (business activity owned financed (not always) and controlled by private individuals).
We have diferent forms of business such as:
-Sole Traders
-partnerships
-Private Limited Companies
-Public Limited Companies
-Co-operatives
-Franchises
-Charities
Now, I will try to explain simply one by one that diferent forms of business.
The Sole Trader is owned, financed and controlled by one person but can employ other people, that kind of business are very common for, bakers, shoemakers etc.
They have some advantages and some disadvantages, the advantages are:
1) Easy to set up, because the laws make easier to set up a sole trader rather than a big company.
2) Personal incentive like, keep all the profits (sometimes this could be a disadvantages), make key decisions you are the owner so you have to make the important decisions about your business, high degree of control, you are the chief, so, You control all departments.
And in my opinion this are the more important disadvantages of a Sole Trader:
1) Unlimited Liability, that means that you can't separate your personal propierties in front of your business obligations, for that reason you can lose everything, like your car or your house.
2) Limited access to capital, normally the banks aren't going to trust in your capacity to return the loans.
The Partnerships are owned, financed and contolled by upwards of two partners, with a contract, the common business are, lawyers, accountants, architecs etc.
Some advantages are:
1) Greater access to capital
2) Shared responsibility
3) Since 2001, Partnerships can apply to be Limited Partnerships
The disadvantages are:
1) Unlimited Liability (look point 3 of Advantages).
2) All partners liable for the debts of the others, in partnerships you are member of a team so you have to support the others.
3) Potential for conflict, sometimes is difficult to make a decision together, a solution normaly is, one person one vote.
4) Decisions of one partner binding on the rest (look point 3 of disadvantages, one person one vote).
Diferences between Private Limited Company (from now Ltd) and Public Limited Company (from now PLC)
With Ltd the number of shareholders is set between 2 and 50, but in PLC you haven't got a maximum number of shareholders.
PLCs shares traded on Stock exchange.
LTDs shares only bought and sold with agreement of existign shareholders.
Common characteristics:
That companies are more complex to set up.
Minimum share capital of 50000€.
Must have a memorandum of association that details the nature, purpose and structure of the company.
Divorce between ownership and control, you can be the owner but maybe you think that other person can manage your company better than you, so in that case you are the owner but not the manager.
Must publish accounts.
Franchises: Is a type of business ownership backed by established a brand name, like Mc'Donalds, Vodafone, Orange, MRW, Zara etc
Normally the owner gets to run a business with less risk, because the business is normally well known.
You don't have to make advertisings because the company makes that for you
The owner buys the right to use the company name, and in order to pay you have to give the 20%,30%,35% even 40% of your profits.
Co-operatives:
This companies exists for the benefit of the members.
There are three diferent types of co.operatives.
1) Consumer co-ops: The members buy the goods in bulk in order to archieve a better price
2) Worker co-operatives: Workers buy the business and take care of the co-operative, the decisions and the profits or losses are shared by the members.
3) Producer co-operatives: Producers organise distribution and sale of products themselves.
