Legal Ownership

Sole Traders
1. Disadvantages
  1. Illness or holidays may mean no income
  2. You need business skills
  3. You are personally responsible for paying all debts, otherwise you could be declared bankrupt, this is called unlimited liability
2. Advantages
  1. Easy to set up, just register with the tax office.
  2. After paying tax, all the profits are yours.
  3. You can trade under your own name without needing permission
Partenerships
1. Disadvantages
  1. Partners may disagree or not contribute equally
  2. Profit must be shared
  3. Decision making may be slower
2. Advantages
  1. Partners can share skills and ideas
  2. Problems can be discussed and different views taken into account
  3. The business can still operate if one partner is ill or on holiday
Private Limited Company
1. Disadvantages
  1. Shares in a private company cannot be sold to the public
  2. Limited companies must comply with more laws and send their accounts to Companies House each year
  3. All directors and company officers have certain legal duties and obligations
2. Advantages
  1. The owners have limited liability for debts. If the business fails, they are only liable up to the amount they invested in the business.
  2. Banks are more willing to lend money
Public Limited Company
1. Advantages
  1. Business receives far more capital which can be used to grow the company
  2. If the business is successful, the value of shares will increase, which increases the value of the company
  3. Some of he profit, after tax, can be paid to the shareholders as dividends
2. Disadvantages
  1. The company must comply with more rules and its accounts are reported in the press
  2. An annual general meeting must be held each year and all the shareholders are invited
  3. If the shares fall in value, many shareholders may sell which lowers the value of the company
Franchise
1. Advantages
  1. The franchiser gives you support
  2. Relationships with suppliers have already been established
  3. You can use a recognised brand name and trade marks
2. Disadvantages
  1. Other franchisees may give the company a bad reputation
  2. You may find it difficult to sell your franchise
  3. You might not be able to make changes to suit your local market

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Legal Ownership

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