A sole proprietorship is a business entity owned by one person who is legally responsible for the debts and taxes of the business
Ownership: 1 owner Life: Ends when owner: - Is unable to carry on, - Dies, or - Closes the firm Responsibility for business debts if firm is unable to pay: Owner
Total control Cheap and easy to start up Keep all the profit Business affairs are private
Unlimited liability Can be difficult to raise finance Can be difficult to enjoy economies of scale, i.e. lower costs per unit due to higher levels of production There is a problem of continuity if the sole trader retires or dies
Ownership: 2 or more Life: Ends when partner(s): - withdraws, - Dies, or - Closes the firm Responsibility for business debts if firm is unable to pay: Partners individually and jointly
Amount each partner will contribute Percentage of ownership of each partner Share of profits of each partner Duties each partner will perform Debts- the responsibility each partner has for the partnership’s debts
Spreads the risk across more people Partner may bring money and resources to the business (e.g. better premises to work from) Partner may bring other skills and ideas to the business Increased credibility with potential customers and suppliers
Have to share the profits. Less control of the business for the individual. Disputes over workload. Problems if partners disagree over of direction of business.
A company / corporation is a publicly or privately owned business entity that is separate from its owners and has a legal right to own property and do business in its own name; stockholders are not responsible for the debts or taxes of the business
Ownership: Can be thousands Life: Continues indefinitely; ends when: -business goes bankrupt -stockholders vote to liquidate Responsibility for business debts if firm is unable to pay: Stockholders can lose only the amount invested
Limited liability Easier to raise finance Stable form of structure Provides more privacy of information than an public limited company
Greater admin costs Public disclosure of company information (annual report & accounts + annual return) Directors’ legal duties (set out by Companies Act)
The objectives are normally more focused on the members of the co-operative, the local community and the world community. Profit is not the primary objective.
Achieve a common purpose. More power to buy or bargain
A long, drawn out decision-making process Co-operatives may find it difficult to raise finance Idealistic and ethical aims may not be agreeable with all members The aims held by many co-operatives may not lead to profits in the long run