Disadvantages
- The sole trader has no one to share the responsibility of running the business with. A Shop keeper of newsagents, for example, may not be very good at handling the accounts.
- Sole traders often work long hours and find it difficult to take holidays, or time off if they are ill, an example of this again is the newsagents, open everyday from 7 Am – 7 Pm.
- Developing the business is also limited by the amount of capital personally available.
- There is also the risk of unlimited liability, where the sole trader can be forced to sell personal assets to cover any business debts.
Partnership
if two or more people wish to set up a business, a partner ship is the best way as it offers a simple way to get started it is just like the sole trader entity but there is two people involved.
A partnership is a type of business where the partners’ share the profit or loss. It is a ‘’ between the owners who agree to carry on an enterprise. They contribute to it by combining their property, knowledge or skills and share its benefits. The partners may have a or ‘declaration of partnership’ and in some agreements that may be registered and available for the public. In many countries a partnership is seen as a legal entity.
An example of a partnership would be a solicitors, this solicitors that I have chosen is Warrington Community Law Centre.
Owning a partnership is better if you have a small business, as most businesses go bankrupt and put the owner in debt, but because there is more than one owner the debt is shared between all of them, as is the profit.
Advantages
- Share Resources/ideas.
- Can cover for each other e.g. during holidays.
- More sources of finance than a sold trader has.
- Can be motivating. (Self actualisation.)
Disadvantages
- Usually unlimited liability (can loose car house ,etc)
- Limited sources of finance. (people wont give you loans as easy because it is a risky business.
- Profits shared between partners. (don’t get as much profit)
- Slower decision making than that of a sole trader. (two people could argue)
Deed of Partnership: this is a legal document which forms a contract between the partners; this document covers the issues such as the dividend of profits, the dissolution (Closure.) of the partnership, the rights of each partner and the rules for taking on new partners. Sleeping Partner: invests in partnership but does not take part in day-to-day business; has unlimited liability. At least one partner must have unlimited liability.
Private Limited (LTD)
An LTD is a type of business incorporated under the laws; this company has shareholders with limited liability its shares are not offered to the community and is only for business men and internal customers.
Limited in shares, this means that the company has shareholders and that the liability of the shareholders to creditors of the company is limited to that, which is originally invested. E.g. the first price value of the shares and any extra paid in return for the issue of the shares by the company. A shareholder’s personal property are protected in case company goes bankrupt but the money that the shareholders have invested with said company will be lost.
An example of a private limited company would be Tesco; the Tesco I have chosen is the one that is on Winwick Road.
Tesco stores is a supermarket that sells clothes, food, drink, alcohol, cards, stationary and costumes, it also sells electricals.
Advantages
- Less dividends (money back from shares)
- Limited liability (cant loose car house etc.)
- Less risky
- Banks with finance
Disadvantages
- Cant sell shares to public
- Disagreements (could effect the businesses because it could start an argument and the partners wont be able to work together.
- AGM(annual general meetings)
- Accounts have to be published
Charitable businesses
A charitable business provides a tool for companies that want to give back their community and stay involved in suggesting grant awards. Companies with a range of community interests find that it is an ideal vehicle for fulfilling their charitable wishes.
In these cases, charitable business funds are typically less costly and easier to administer than other forms of giving such a private foundation.
An example of a charitable business would be a charity; the charity I have chosen is St Rocco’s I have chosen this because there are many across the world, this charity sells clothes, toys, books, DVDs, videos, badges and hats, they use some of the money that is fundraised for the charity to pay for the rent of the business.
Advantages
- Feel good about them-selves.
- Changes the world.
- Helps people.
- Working for a good cause.
Disadvantages
- You don’t get any money.
- You don’t always get funds it depends if someone chooses your charity or not.
- People might not give you stuff to sell so you won’t make any money apart from the donations.
- Lots of marketing needed.
A charitable business has to be a registered charity before it can set up.
By Jason Lawley
