Disadvantages
- The sole trader has unlimited liability. This means that if the business is unsuccessful, the sole trader will have to pay back all the businesses debt, even if they have to sell personal assets.
- The sole trader can become extremely stressed as they have all the responsibility for the business.
- It can be difficult for the sole trader to take time off, as there may not be anyone else to take over.
Partnership
CD world is
- A partnership usually involves between 2 people.
- Decisions are shared and profit is also shared out amongst partners so anything we get for CD World it will share.
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Legal documents such as the Deed of Partnership have to be signed before the business can begin.
Advantages
- As there is more than one person in a partnership, responsibility, stress and pressure can be shared.
- Also as there are more people there are more ideas that can be shared.
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Some partners may be better at one job than another - everyone can specialise in a particular area.
Disadvantages
- People argue. Disagreements may cause friction within the business.
- Partners have unlimited liability, so partners may be less willing to invest.
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The legal documents that have to be drawn up can take time to complete.
CDs World
This business is a partnership and also limited liability.
The reason is partnership is because we can put all the money and make the shop better and partnerships is between 2-20 and limited liability is because when some this happen to the shop I do not lose my house or anything.
Private Limited Company
Main Features
- People who own part of a private limited company are called shareholders.
- Family and friends can only buy shares for a private limited company.
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Private limited companies have Ltd after their name, for example Schuh Ltd
Advantages
As only family and friends can buy shares for an Ltd it can be difficult. They may not want to buy shares. There are legal documents that have to be completed which can take time. Shareholders have limited liability. This means if the business is unsuccessful then they will only loose the money that they invested. More capital can be raised because there is no limit on the number of shareholders.
Disadvantages
Shareholders may argue or disagree. Private limited companies are not allowed to sell shared to members of the public. This restricts the amount of capital that can be raised. The public can inspect financial information filed by the registrar. Sneaky competitors may use this to their advantage.
Public Limited Company
Public Limited Company
- These companies have plc after their name, for example Marks and Spencer Plc.
- Shares can be bought and sold by members of the public on the stock market.
- The price of shares varies. If the business is doing well then the shares will be more expensive than if the business is doing badly.
Advantages
- Because shares can be bought and sold by members of the public, a plc can raise capital easily.
- All shareholders have limited liability.
Disadvantages
- Because shareholders of a plc are members of the public, control of the business can be lost if someone buys a great number of shares.
- Shareholders often don't know each other shareholders may feel isolated.
