• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Different Types of Business.

Extracts from this document...


Legal Status of a business Different Types of Business Sole Traders A sole trader is the simplest form of business organisation. There are no legal requirements - you simply set up and get on with trading. Any income or profit that you earn is yours and yours alone and you pay income tax on that income. There are few legal constraints and you have what is called unlimited liability. This means that any debts are your debts and so if you stop trading with large debts, you will be personally responsible for these debts. Creditors will have a claim on your house, yacht or any other personal assets you may have. * Advantages o Cheap and easy to start o All the profit is yours o You are your own boss o You do all the work * Disadvantages o You have NO limited liability o All the risk is yours o What about sickness and holidays? o Do you have all the skills? Tax implications There are also important tax implications of operating a sole proprietorship. Net business income from a sole proprietorship must be included as part of the sole proprietor's personal income. ...read more.


Unlike a sole trader where the liability is unlimited, with a limited company the liability is limited to the value of the shares issued. This means that any debts are debts of the company and not of the owners. To form a limited company it must be registered at Companies House and the firm must have various legal documents including a Memorandum and Articles of Association. There need only be one director and they have to prepare annual accounts and submit them to Companies House. Private limited companies can range significantly in size. * Advantages o You have limited liability o Easier to raise larger sums of capital o More flexible than PLCs o Opportunities for bringing in more skills * Disadvantages o You can only sell shares privately o Not very flexible if expansion becomes possible o More legal formalities than sole traders Public limited company Like a private limited company, a plc has shares, but the key difference is that these shares can be bought by anyone freely on a stock exchange. Ownership is therefore open to anyone who wants to buy shares. PLCs have legal requirements in that they have to produce annual reports and accounts and file them with Companies House. ...read more.


To continue using the name, the franchisee will usually have to pay a set fee either every month or every year. These fees can be substantial. In exchange, the franchisee gets to use the franchise name and sell the franchise product. People will know your business name and you will not have to spend time developing a marketing plan or customer recognition of your business. o There are many complicated legal issues involved with buying and operating franchises. You should consult a lawyer and an accountant if you plan to enter a franchise agreement. Laws of business Memoranda and articles of association The memorandum of association defines the following key points: The company name The address of the registered office A statement of limited liability A statement of the companies authorised share capital and share price. What the company will do (the objects) Statutory Books Statutory Books are the official records kept by the company relating to all legal and statutory matters Statutory declaration Partnership agreements The Companies Act 1985 and 1989 The Partnership Act 1980 The Business Names Act 1985 Contract, Consumer and Employment Law Standard Forms Of Contract Forming An Agreement Capacity To Contact And Intention To Create Legal Relations Consideration Illegality Duress And Undue Influence Exclusion Clauses Express And Implied Terms Termination Of A Contract Arbitration In Circumstances Of Dispute ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Business, Companies and Organisation, Activity section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Business, Companies and Organisation, Activity essays

  1. Exmaining different types of business ownership with examples of each.

    They also want to increase the quality and quantity of their chocolates. Another purpose is to bring their products and services to new countries. The advantage that Cadbury is a PLC is that they various ideas/personalities which mean that because they have so many shareholders all these shareholders have new and different ideas from each other.

  2. Assignment to investigate two types of business organisations - Sole traders and partnerships.

    * The partnership has a lack of continuity, e.g. if a partner dies than the partnership is automatically dissolved. * Partners can take decisions without consulting the other partners. * Even with the extra source of finance, there is still a lack of capital. * Disagreements between the partners. Questionnaires Sole Trader: (Mario) 1. When was the business formed?

  1. English for business

    What do lack of information, of motivation entail? 7. How can you work on your weaknesses? Little perfectionism can work wonders. But it isn't normal thinking; it is faulty thinking. Beliefs and feelings are inaccurate; appropriate working is far more valuable than perfectionism to any company.

  2. Business Studies

    stakeholders in resolving disputes * Costs and benefits of industrial disputes - Financial, personal, social, political, international > Designed to raise awareness of a source of conflict - conflict could have serious consequences Financial costs: > Loss of income for employees > Loss of production/output by the business > Loss

  1. Business studies - Business Plan

    on what I am doing I should not encounter and problems as this is something that requires my full attention. I can get on well with others which will be very important as I will have to follow instruction for the designing of the webpage and sort out any problems

  2. Business Ownership

    into the business not only does Nokia have other shareholders and sources of money this way there business gains a better reputation. Below is the document which Nokia show to their shareholders. Another advantage of Nokia being a PLC is that the owners only have limited liability as the shareholders

  1. Describe the Limited Liability Partnership and explain the emergence of this new legal form ...

    Gray14 describes this as 'a guarantee requiring him or her to contribute up to a maximum specified sum if the assets of the LLP become available to its liquidator.' This is true of a limited company where the debts in liquidation are limited by share or guarantee.

  2. Business Plan. After putting a lot of thought into what kind of business we ...

    * Brand franchising - this means that an inexperienced franchisee is not allowed to set up from the start. McDonalds use this type of franchise because they already have a reputation. The customer will know they are buying the same product if they are in London or they are in Paris.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work