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Types of Businesses.

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Introduction

SOLE TRADER- This type of business is owned by one person- although he or she may employ other people to work in the business. A sole trader is someone who decides to own and run his or her own business and most probably uses personal savings as capital to start it up. There is therefore just one person taking all the risks. If the firm is successful then the owner's reward is the profit. The owner can keep all the profit after expenses have been paid (called the net profit), although he or she must pay income tax on this to the Inland Revenue. If the business is unsuccessful then the owner loses money. The concept of unlimited liability means that the owner may also lose his or her personal possessions and be made bankrupt. ...read more.

Middle

They have unlimited liability. The main disadvantage is ALL the profit must be shared. FAMILY PARTNERSHIP- Is the same as a partnership except the owners are all part of one family. PRIVATE LIMITED COMPANT (LTD) A Private Limited company is run by shareholders. The business can still remain small. Many private companies are family firms where the family members are the only shareholders. Under European law, one person can set up a private company on his or her own. All the shareholders have protection of limited liability and can lose only the amount of money they have invested no matter how much is owed. Banks are more willing to lend money to limited company's both for start up and for expansion. The company has a separate legal identity from the owners. ...read more.

Conclusion

The shareholders hold shares, but have nothing to do with the day-to-day operation of the company. A plc must have more than �50,000 in paid-up share capital before it can be floated on the Stock Exchange and also needs good financial track record. However, not all plc's choose to have a listing on the Stock Exchange. In case, they are known as unlisted plc's. A public company can still remain small enterprise. The minimum is two directors and two shareholders. Additional finance can be raised in several ways. The company can borrow from a range of financial institutions, issue additional shares or ask for special loans, called debentures. Shareholders except to receive a dividend in return for their investment and will also want the shares to increase in value. If the company is in difficulties and share values fall, then many shareholders may sell which will lower the price further: This can make the company venerable to a take-over bid. ...read more.

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