Disadvantage of being in Partnership:
- The Business owner has to share the profits.
- The partner may not be agreeing with each other and some member of people may work harder than others to show their capability to others, which may cause struggle into business.
- The partner have unlimited liability for all the debts.
- An action of decision making in slower.
What is Deed of Partnership?
A deed of partnership sets out the right of each partner, such as the ways dividends are divided. A Partnership deed covers real property to multiple owners who are identified as partnership in a business partnership on the face of deed. That types of conveyance a tenancy in Partnership. Generally, if a member of partnership that owns real property dies their interest passes to the member of partnership.
Who are the partners?
In deed of partnership is Stake holders who want to invest money in to business within partnership.
How much money each partner has put into the business.
It will be on member’s personal Circumstance on capital how much they will be investigating into business, some time the investors might be not able to much capital and some investors might take risk to spend money in their to production. The capital will be depends on how much money did investors have put in to the business to share it after their income.
How the duties are divided up. Who will do what?
The duties will be divided up and based on the strengths and weaknesses of stake holders. A Sleeping partner is usually someone who has invested money in to a business but plays no active parts in duties.
What happens if the partners want to leave the business?
If Partners want to leave the business then they usually wish to have their money back they have invested so far, the member of staff might want to register as a PLC (Private Limited Company).
Limited Liability is risky, so it is a good idea to depart into Private Limited Company, as this will protect the private finances the Individual.
Business Ownership
Private Limited Companies (LTD)
Limited Liability Companies have their own Identify and company is that it has a separate legal identity. People can do various things, such as own money and property, make contracts, take legal action against people, pay tax and so on, their company also have their own list of ‘chores’. They have to pay their taxes, publish their accounts, and so on.
This is the extraordinary example of Private Limited Company nearby Chatham High Street
One essential difference between limited companies and sole trader and partnership is LIMITED LIABILITY. A Limited liability is that if the company has debts they not going to lose the amount of money that they have in business. Private limited Company can be may be “Private” or “Public”. Carphone Warehouse is just one example of a public limited company. Originally, it was private limited company until it was “Floated” on the London Stock exchange.
How do shareholders set up a limited company?
Private Limited Company has to produce 2 main documents
Before a company can be formed, a number of legal documents must be completed. Most important are Memorandum of association and the Articles of Association.
What is Memorandum of Association?
The Memorandum is the article which gives particulars of a company’s principle and its shareholders.
The Memorandum of Association:
-
The type of business have limited liability;
- The part of the United Kingdom, whether England, Scotland, Ireland, in which the registered office of the company is to be established;
- The name of the proposed company;
- The amount of investment (capital) of the proposed company, capital will be shared and amount of each share; and
- The Object for which the proposed company is to be established.
In limited company business is required to at least two members.
What is Articles of association?
Regulations for governing the rights and duties of the members of a company among themselves. Articles deal with internal matter, intrinsically general meetings, and appointment of directors, issue and transfer of shares, dividends, accounts and audits.
The Articles of association:
- The investors must know the duties of the directors
- Share holders has to keep the voting right
- Details concerning meeting within a business, such as chairperson for the Annual General Meeting
- The arrangement for auditing account of the Business.
- capitalisation of profits
When these are completed, they are sent to the REGISTOR OF COMPANIES, who will then issue the business with CERTIFICATE OF INCORPORATION. For example in Verbal words this is really the birth certificate of the company, which allows to trade as a Private Limited Company.
It can be exceptionally easier said than done for a shareholder in a (PLC) Private Limited Company to sell their shares, since a purchaser have got to originate within a framework of the company. Consequently, business affairs can’t be kept private like sole traders or a partnership.
A private Limited Company is Business Firm in the private (non-public) sector of am economy, controlled and operated by Private individuals.
In Private Limited Company the legal requirements for incorporating of UK Shares are as follows:-
- An administrator and secretary can be of any ethnic group.
- Secretaries can be corporate bodies or private individuals.
- prior arrangement of a company Secretary is no longer required but the secretary duties remain
- Business subscribers may be residents outside UK.
- You must employ at least of 1 administrator.
- There is no highest number of Directors.
- Directors can be corporate bodies or private folks except in the case of single director companies which must have a personality as administrator.
- There is no max & no min contributes to investment.
- Directors necessitate not be officially trained.
- There must be a minimum of one share in issue.
- The maximum is determined by the share capital as specified in the Memorandum.
- The business is compulsory to have a registered headquarters in the UK.
Benefits of Forming a Private Limited Company (LTD):
- Private Limited Company have limited liability, the shareholders can lose money that they have invested in Business, refusal substance in owned by the company.
- They can invest much profit by selling large amount of shares, this can direct to larger sums of money to supply in industry.
- Occasionally, banks are more agreeable to lend money to limited companies contrast to sole trader or partnerships.
- Business Owner has the control to not transfer the shares to any other citizens except the shareholders agree.
Drawbacks to Forming a Private Limited Company (LTD):
- Cost: It is pricier to locate, as it must not only pay taxes and employee insurance, but also any legal fees or other incidentals involved in the business.
- Lack of Privacy: Financial records are not confidential.
- The business cannot recommend its shares to the general public
- The accounts of the company are much less secret then for either sole trader or partnership.
Stock exchange
Business ownership of Private limited company to modify into public limited company they might need shares of minimum 50,000 to run it with rule and regulations than sole trader or partnership.
Business Ownership
Public Limited Companies (PLC)
Public Limited Company is usually a large and common Business. This could be a manufacture of retailer with branches in most city centres.
Key Features of Public Limited Company:
The Good
- Shareholders own shares but have nothing to do with the routine operation of the corporation.
- Some Examples include Marks & Spencer’s, Barclays Bank and Tesco etc.
- The Financial affairs of the company are public knowledge and often quoted in the press
- Directors run the business
- PLCs are floated on the stock exchange
- The Public Limited Company can still remain quite a small business. The minimum is two directors and two shareholders.
The Bad
- A Public company is registered with the register of Companies and has to comply with many regulations.
All the Advantages of Private limited Companies which include:
- Limited Liability
- Ability to raise extra finance
- Banks are more agreeable to lend them money.
The Advantages:
- The amount of capital for expansion and development is greatly increased because there are thousands of shareholders.
- Public Limited Companies can advertise their shares to the general public. This makes it easier to increase large value of money, more so than it would be for an Ltd, which can only sell its share confidentially.
- A public company can remain a small enterprise. The minimum is two directors and two shareholders.
- Shares of private limited companies (Ltd) cannot be sold on the stock exchange.
All the Disadvantages of Private limited Companies which include:
- Limited companies have to comply with more rules and regulations than sole traders or partnerships.
- It is more expensive to set up – more than £50,000
- Financial records are not reserved confidential.
The Disadvantages:
- A public limited company is registered as such with Register of Companies and must meet the terms with many external regulations.
- It is even more high-priced to locate a public limited company. They have to spend money to publicize their shares.
- The PLC must disclose even more information about itself.
- There is more chance of the original owner losing control because anyone can buy or sell a share.
- The business may become harder to manage.
The Public Limited Company gives opportunity to buy Franchise such as to Sole Trader or to partnership to invest the capital in to Business.
Business Ownership
Franchise
What is Franchise?
A Franchise is associated to one person’s superior production to put it in to the idea. An alternative idea is to buy active industry and get the right to use active business suggestion. Such as body Shop, McDonald’s and prontaprint.
The Example of Burger King and Body Shop at Chatham High Street and Prontaprint as Franchise in Canterbury, which is near by Kent
A Prontaprint is larger provider of digital design, print and copy services in the UK. Other support includes guidance an obtaining start-up capital, a comprehensive franchisee “package”. Prontaprint is a successful organisation, It has grown from one outlet in Newcastle in 1971 to over 200 all over the UK, its term of dedicated sales people who continually promote the business and also because of the enthusiasm and commitment of it franchise. Buying a Franchise is like marrying someone you haven’t known for very long, it is long – term relationship
“The franchisee pays the franchisor a fee to buy the business idea at the beginning of the franchise agreement”
Benefits of being franchisee
- It is an well - known company plan and more possible way to be successful
- The Franchisor will give advice and the guidance to facilitate the franchise be successful
- It is easy to get money from the bank to start a franchise than to start as a sole trader because the banks would believe it is less perilous
- Any kind of crisis can be discussed with a Franchisor.
Drawbacks of being franchisee
- It’s more expensive to set up as Franchise than as self-determining Business.
- Every Franchise has to pay primary fee approximate between 5,000 to £100,000 to set up using the franchisors name
- The franchisor usually has to pay royalty payments to the franchisor every single year, only their products or package can be sold and this supply can be expensive for franchisor.
- Some unprincipled franchisers mislead or take advantages for their franchise.
- Misleading sales presentations
What is Franchisor?
A franchisor is a corporation that sells the right to use its name and /or functioning organization to do individual owners. One of the best known franchisors in McDonald’s
Advantages of organism a Franchisor
- The expansion of the franchise is paid for by the franchisee that pays for the shop and has to acquire the licence to use the product name.
- Extension is much faster than if the franchisor had to investment the new opening from its own wealth.
- The licence of the sale to use the product name and merchandise is a major source of income
Disadvantages of organism a Franchisor
- The most important drawback is that the franchisor has very little control over how the franchisor sells their product. If the franchisee is running the franchise badly this could lead to a bad representation for the in general franchise name.
Franchise can turn into Public limited company
Business Ownership
CO-OPERATIVES
What is Co – Operatives?
“A cooperative (also co-operative; often referred to as a co-op) is a business organization owned and operated by a group of individuals for their mutual benefit” Co-operatives are a fairly unusual type of business in the UK and is really rarely found. There is special type of limited liability Company owned by the members. Every single person have to vote, regardless how much capital they investing in to business.
“Membership has increased to 4.5million from 4.2million six months earlier. The biggest contributor to profit is its chain of 3,000 supermarkets - newly enlarged following February's £1.6billion acquisition of Somerfield”
They have same aim as all co-operative: They are run by the owners or the members for the benefit of all.
“Peter Marks outside the Co-operative Group's flagship Bank, Food and Travel opening in Manchester”
For Example: The co-operative group is a United Kingdom consumer’s co-operative and after the acquisition of Somerfield supermarket is the world’s largest consumer-owned business, with other 4.5 million members and 23,000 employees in business. There industry famous for retiling means all the grocery, Banking, Insurance, Travel agency, Farming, motoring, Funeral directors, Pharmacies. The consumer Co-operative was founded in 1863; In Manchester, England, United Kingdom is the main headquarters and Peter Marks who is chief Executive of this Business.Alpha Communications Ltd, in Durham is also a design Company. It is also a co-operative because each worker jointly own and controls by the company.
The advantages of Co-operative Organisations
Different cooperative organisations or cooperative societies have different advantages for its members. Even then there are some common advantages which the entire co-operatives offer and these are as follow:
- Limited Liability: The liability of the membership in this organisation in limited to their shares or guarantee given by them.
- Each worker/owner has an equivalent share in the business and one vote each one.
- Easy Formation: A co-operative society can be formed easily; any adults can establish a co-operative society by getting registered with the Register of Co-operative societies.
- Decisions are made jointly be the owners and in the interests of everyone.
- Jobs can be alternate so people can widen their skills and the smallest amount of jobs can be common
- Supply of goods at cheaper Rate: The societies make bulk purchase directly from the wholesale traders and producers, so the goods have became at cheaper rates. That is how these upper classes market make their benefit.
The disadvantages of Co-operative Organisations
- If everybody is involved in decision-making then it may take a long time to choose the right choice, tough business decision may disagreement with member of staff, such as sacking a worker even if this would be in the best attention of the business, this means they make sacked the main member of staff who is more attention to the business
- Expanding the business may be complicated as shares cannot be advertised and sold to the public, unlike a public limited company.
- Banks and other financial organisations are repeatedly distrustful of lending capital to co-operatives because there is no predictable organizer.
Harigna Hinglajia Candidate No: 5225 Centre No: 61217