Forms of Business 18

Forms of Business The four main forms of business organisation are:  Sole Trader  Private Limited Company  Co-operative  Semi-State Company 18

Forms of Business The Sole Trader is a person who owns and runs his or her own business Advantages of being a sole trader  A sole trader business is easy to form  A sole trader has lower costs  Decisions can be made quickly  The sole trader has flexible trading hours  The sole trader keeps all the profits 18

Forms of Business Disadvantages of being a sole trader  A sole trader has unlimited liability  The sole trader must provide all the capital  The sole trader is responsible for all parts of the business  Prices are higher than in other forms of business 18

Forms of Business A private limited company is formed when between 1 and 50 people join together to set up a business with limited liability  The people who put money into the new business are called shareholders  The total amount invested in the business is called the capital  The company name is followed by the letters Ltd 18

Forms of Business Limited Liability means that if a private limited company goes bankrupt, i.e. has debts which they are unable to pay back, the shareholders will only lose the amount they have invested in the company. 18

Forms of Business Advantages of a Private Limited Company  The business owners have limited liability  It is easy to raise money to expand the business  Decisions making can be shared  It is possible to attract the best managers and employees 18

Forms of Business A number of documents are required when setting up a limited company. 1. Form A1 which contains:  The name and registered address  The names, addresses and occupations of the directors  A written promise from the directors to be a director and run the company properly 18

Forms of Business Documents required setting up a limited company 2.Memorandum of Association which contains:  The name of the business  The objectives of the business i.e. what it was set up to do  The amount of capital invested in the business  The names of the directors of the new business  A statement that the business has limited liability 18

Forms of Business Documents required setting up a limited company 3.Articles of Association which contains:  The name of the business  The amount of share capital in the business  The number of directors in the company and how they are elected  The procedure for calling company meetings  The voting rights for each type of share in the business 18

Forms of Business The Co-operative Co-operatives are organisations formed by people who join together to achieve a particular objective which they could not achieve on their own. There are various types of co-operative:  Producer Co-operative  Retail Co-operative  Worker Co-operative 18

Forms of Business State Ownership State Ownership refers to companies and organisations owned by the State (Government) and known as semi-state companies or state-sponsored bodies. These businesses provide goods and services for consumers and examples include the ESBand Bord Gais. 18

Forms of Business Importance of state involvement in business are:  Essential services will be available in all parts of the country  The country’s natural resources will always be owned by the people  The government may receive regular dividends  They provide a lot of employment 18