What is a Sole Trader?
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Tecsave History Year Type of Ownership No. Of Outlets 1947 Sole Trader 1 1957 Private Limited Co (Ltd) 56 1965 Public Limited Co (plc) 187 What is a Sole Trader? The sole trader type of business is owned by one person. The sole trader can employ people but these employees are unlikely to be involved in the control, financing or decision-making of the business This type of organisation has unlimited liability which means that there is no limit to the amount of the business's debts that the owner is responsible for. If the business should fail, the sole trader may have to sell personal possessions- e.g. house and car- to pay off the business's debts. Advantages: ? It is easy to set up a business as a sole trader as there are no complicated forms or procedures to follow before you can start. ? Sole Traders usually need less capital to start up. ? Sole traders are their own bosses. Disadvantages: ? Small businesses are seen as more of a risk by financial institutions, so it can sometimes be difficult to raise money to help start a business or to expand it later on.
Advantages: ? The company can raise extra capital by selling more shares in the company and thus giving it more of an opportunity to expand. ? The private limited company has its own legal status, separate from the shareholders. This means that, like people, it can sue and be sued and it can own property. Disadvantages: ? It is more difficult and expensive to set up a limited company than a partnership or sole trader as there is much more administrative work to do. ? The limited company cannot sell its shares on the stock market. What is a Public Limited Company? Only two people are needed to set up a public limited company and there is no upper limit. It had plc at the end of its name, which distinguishes it from a private limited company. Members of the general public, as well as other businesses and financial institutions, can buy shares in a public limited company. Most Public Limited Companies start out as Private Limited Companies.
Becoming a private limited company gave Tecsave the limited liability it did not have before when Robbie Peers was a sole trader. Limited liability offers security within the business and means that if the company gets in any debt, the shareholders are not at risk and will not have to give up their own possessions to get the company out of trouble. Later on, in 1985 Tecsave became a Public Limited company with 187 shops in Britain. Becoming a plc. Is a way of raising money as shares in your business can be sold on the stock market to anyone. The money used from selling these shares is useful in a big business in order to expand it and make it even more well known. Tecsave can open even more outlets with the money made selling shares and can also make existing stores even more modern and customer-friendly. To become the leading supermarket in the country, Tecsave will need to have the most stores open in every town. To do this needs money, which is why it was a good idea for Tecsave to change from being a private limited company to a public limited company.
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