My assignment will be based on two businesses, a sole trader and a public limited company.

Unlimited liability

There are a lot of responsibilities if you are a sole trader; you are responsible for all your business liability (debts), is known as unlimited liability. So if you get into a loss and you can’t pay your dept the bank will take Errol’s personal belongings e.g. cars, houses etc. This means Errol got to pay up his debt, which he took from the bank, and need to work hard to achieve this.

Public Limited Company

The owners of the PLC Sainsbury

Shareholders are the people who own the limited company and they appoint directors to control the management of the company and to make a future for the PLC Sainsbury. These directors are chosen in an annul meeting which last took place on the 12 of July 2004. Philip Hampton is the chairman of Sainsbury. In the PLC Sainsbury, the shareholders can only speak their thoughts and the get to vote at the annual meetings that is held once a year and it is mainly the directors who have power over the company.

Limited liability

Sainsbury’s shareholders have a limited liability so they are not personally liable for Sainsbury’s debts. The only money they can lose is the money invested in purchasing shares in that company.

Profits

The portion of a PLC profits is reinvested in the business and a portion of a company’s net income paid shareholders as a return on their investment in the company. A shareholders dividend yield is determined by dividing the company’s annual dividend of its current share price. Dividends are declared on suspended at the discretion of the company’s board of directors.

Differences between a sole trader and a Public Limited Company (PLC)  

Owners

The owners of my PLC Sainsbury are the shareholders, my sole trader, Errol Anderson is not owned by a group of people or by a single person.

Liability

Sainsbury have limited liability. The shareholders are not financially responsible for any debts Sainsbury can get into; they only lose the amount of the money invested by themselves and the shareholders. However Errol Anderson has unlimited liability and therefore has to take full responsibility this means is Errol goes in loss and can not pay his debts, his personal belongings can be taken as the money you own them.

Losses

As shareholders own Sainsbury, the only money they can lose is the money invested in buying the shares. This is because of the limited liability. On the other hand sole trade, Errol is fully responsible for his debts and payment if he gets into a loss and cant pay his debts, the bank will take personal belongings.      

Decision Making

In my PLC, the board of directors make Sainsbury’s decision-making. The board of directors are chosen by the shareholders during the annul meeting. My sole trader, Errol Anderson is the decision maker of his small business. He has total control over business, including ownership and responsible for all profits and losses.

 Business Changes

A sole trader can make a lot of changes in order to make their business more successful and easer to control.

Business Ownership    

My sole trader can change from a sole trader to partnership. A partnership involves two or more co-owners participation together in a business. A partner may be an individual or a company and each partner shares in the responsibility, capital and profits of the business. It is a good idea to sign a deed of partnership. If it works out Errol’s business would be more might successful and he can invest in making is more changes to make his business much more bigger and successful.