Question

give a short description of each of the following types of business organisation.you can do it...

give a short description of each of the following types of business organisation.you can do it by description the common objection in which the business operates (for example buying or selling activity, profit,charity or a social club). as part of your answer you also need to indicate the environment where this particular business operates .

a) sole trader

b) partnerships

C) limited company

d) private company

e) public LTD company

Homework Answers

Answer #1

A) Sole trader – also known as a sole proprietorship – is a simple business arrangement, in which one individual runs and owns the entire business. The term ‘sole trader’ refers to the legal structure of the business, rather than the number of employees. As such, while a business registered as a sole trader might only consist of the owner, it might also consist of the owner and additional employees.

In sole trader set-up – there is no legal distinction between the owner's finances and the business's finances. As such, if a business fails, the owners are personally responsible for any debts.

Example-  Local Grocery Shop, Local Chemist Shop, Beauticians, A beauty salon etc.

B)A partnership is a formal arrangement by two or more parties to manage and operate a business and share its profits. There are several types of partnership arrangements. In particular, in a partnership business, all partners share liabilities and profits equally, while in others, partners have limited liability. There also is the so-called "silent partner," in which one party is not involved in the day-to-day operations of the business.

  • A partnership is an arrangement between two or more people to oversee business operations and share its profits and liabilities.
  • In a general partnership company, all members share both profits and liabilities.
  • Professionals like doctors and lawyers often form a limited partnership.

There may be tax benefits to a partnership compared to a corporation.

Types of Business Partnerships

1-General Partnership A General Partnership is composed of 2 or more persons who agree to contribute money, labour, or skill to a business. Each partner shares the profits, losses, and management of the business, and each partner is personally and equally liable for debts of the partnership.

2- Limited Partnership is composed of one or more general partners and one or more limited partners. The general partners manage the business and share fully in its profits and losses. Limited partners share in the profits of the business, but their losses are limited to the extent of their investment. Limited partners are usually not involved in the day-to-day operations of the business.

3-Limited Liability Partnership (LLP) A Limited Liability Partnership (LLP) is similar to a General Partnership except that normally a partner doesn’t have personal liability for the negligence of another partner. This business structure is used most by professionals, such as accountants and lawyers.

4-Limited Liability Limited Partnership (LLLP) Limited Liability Limited Partnership is a Limited Partnership that chooses to become an LLLP by including a statement to that effect in its certificate of limited partnership. This type of business structure may shield general partners from liability for obligations of the LLLP.

5-Corporation A Corporation is a more complex business structure. A corporation has certain rights, privileges, and liabilities beyond those of an individual. Doing business as a corporation may yield tax or financial benefits, but these can be offset by other considerations, such as increased licensing fees or decreased personal control. Corporations may be formed for profit or nonprofit purposes.

6-Limited Liability Company (LLC) A Limited Liability Company (LLC) is formed by 1 or more individuals or entities through a special written agreement. The agreement details the organization of the LLC, including provisions for management, assignability of interests, and distribution of profits and losses. LLCs are permitted to engage in any lawful, for-profit business or activity other than banking or insurance.

7-Joint Venture A Joint Venture is formed for a limited length of time to carry out a business transaction or operation.

Example-

Red Bull & GoPro

One example of a partnership business is the relationship between Red Bull and GoPro. GoPro sells more than portable cameras, while Red Bull sells more than energy drinks. They are both lifestyle brands that have similar goals.

Spotify & Uber
the goal was to get as many customers as they can and they taught that while driving with Uber, customers can put their favorite playlist using the Spotify which created a comfortable ride for the customer.

C) A limited company is a type of business structure whereby a company is considered a legally distinct body.

as a limited company, the business will:

  • Be legally distinct from the people who run it;
  • Keep finances separate from the owner's personal finances;
  • Be able to own assets and keep any profits it makes after tax.

have limited liability – meaning that owners and shareholders are not personally liable for any losses or debits incurred by their business.

Limited liability is one of the main advantages of the limited company set-up as shareholders are only legally responsible to the extent of their original investment, and can only lose the capital they initially put into the business.

D)A private limited company, or LTD, is a type of privately held small business entity. This type of business entity limits owner liability to their shares, limits the number of shareholders to 50, and restricts shareholders from publicly trading shares.

The owners of private limited companies are known as shareholders and each holds a certain number of shares in the business.

To become a shareholder you must purchase one or more shares issued by the company and these are issued when you form the company with each share representing an equal percentage of the business.

Directors – known as company officers – manage limited companies and they can be shareholders as well. A limited company must have at least one director and most company owners are directors – meaning you can own and manage a limited company yourself or with others.

Examples- Deloitte, Ernst & Young etc

E)Public limited companies (PLCs) are similar to private limited companies, in the sense that they are legally distinct entities with their own assets, profits, and liabilities. However, shares in a public company can be freely sold and traded to the general public and their shares can be listed on a stock exchange. PLCs are the only type of company allowed to raise capital from this type of public investment.

Public companies are strictly regulated and are required by law to publish their complete and true financial position so that investors can determine the true worth of its stock (shares). Also called publicly held company. Public limited company and its abbreviation Plc are commonly used in the UK in the way that corporation and Inc. is used in the United States.

Examples include BP p.l.c., Barclays PLC and Marks & Spencer Group plc, Yahoo! Finance, etc

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