* Types of business
* Mission Statements
Types of Business
Sole Trader – one owner of business (1 person who has legal responsibility) such as gardener, window cleaner, small retailer, and plumber
* Caters for needs of local people
* Profits don’t have to be shared
* Business affairs can be kept private
* Speedy decisions can be made as few people are involved * Personal attention can be given to company affairs and customers * Easy to set up as no special paperwork is required
* Less capital required as these are generally small businesses
* Unlimited liability puts personal possessions at risk (no matter what debt has been ran up the sole trader has to cover it) * Finance can be difficult to raise
* Small scale limits discounts and other benefits of a large scale production * Prices are often higher than those of larger organisations * Ill health/holidays etc. may affect the running of the business
Partnership – silent partner, joint/full partner -usually a partnership deed is drawn up referring to financial matters, capital contributed, salary and rules & guidelines for general running of the business.
Limited partner may be introduced as long as they take no active part in the running of the business. However, there must always be at least one partner with unlimited liability.
* Capital from partners
* Larger-scale opportunities than for sole traders
* Spreads responsibilities and decisions
* Members of the family can be introduced to business
* Affairs can be kept private
* Unlimited liability (except for sleeping partners)
* Disagreements between partners
* Limit on number of partners
* Partnerships have to be re-formed if partner dies
* Responsibility for other partner/s actions
Private Limited Company (Ltd.) – you are no longer an owner you are a shareholder. (Private means you cannot advertise sales of shares publicly) Liability of shareholders is limited. Has 1 unlimited shareholder
All limited companies must comply with the ‘Companies Act’ of 1948 and 1980 and register with the Registrar of Companies: 2 documents must be completed:
Memorandum of Association: Name of the company
The purpose of the company
What the company does
Articles of Association:States the internal rules of the company such as;
Voting rights of shareholders
Rules regarding meetings
List of directors
Must go to a solicitor for these documents.
Once these documents have been filed with the Registrar of Companies, a Certificate of Incorporation will be provided and the company can then start trading.
* Money from shares
* Firm grows bigger so does size and range
* Limited liability
* Cannot sell shares to the public
* Danger of selling too many shares and therefore spreading the profit very thinly * Accounts no longer private
* Limitations on capital
Public Limited Company (PLC)
(Company- owners are no longer, they are now shareholders, public- can sell shares anywhere to anyone)
Have 2 unlimited shareholders
PLC’s have the opportunity to become larger than other forms of private business organisation. They are allowed to raise capital through the Stock Exchange, which quotes their share prices.
The process of becoming a PLC is, in many ways similar that of Ltd Company:
Memorandum of Association and articles of association as well as a variety of other legal documents have to be approved by the Registrar of Companies who will then issue a Certificate of Incorporation. The PLC will then have to issue a Prospectus, which is an advertisement of invitation to the public to buy shares in the company.