There are at least six different types of business you could choose to start:
Sole trader – the oldest form of trading there is, it’s also the simplest and the most common type of business you’ll find. The clue is in the name – meaning that you are solely responsible for everything the business does and you’re often known as the proprietor. This is the usual form for small shops and businesses that provide services such as beauticians, hairdressers, photographers, gardeners and so on.
When you start out in business, most often you use your own money to fund the venture. However, as you start to grow, you may need to find funding elsewhere. When this happens you may want or need to enter into another kind of business model:
Partnership – these are made up of two or more people and any profits, debts and decisions related to the business are a shared responsibility. These are common for practices that offer services such as accountants, dentists, doctors, solicitors and so on.
Company – the correct name for this is a joint stock company and it’s made up of a number of people who put their money together to form a ‘joint stock’ of capital. These people are more commonly known as shareholders and, as the name suggests, they each own a share of the business and each expect a share of the profits too.
Each shareholder puts money into the company and receives a portion of the company – shares – equivalent to what they put in.
Despite each shareholder owning a piece of the company, in law it is seen as a legal entity – the same as an individual – that is entirely separate from the shareholders or members, as they are sometimes known. It can be sued, make a profit or loss, be held responsible for its employees’ actions and go into liquidation – the term used for companies that go bankrupt.
Private Limited Companies
Most small businesses are private limited companies with the shares only available privately, for example, to family members....
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