Type of Business/ Sole Trader Partnership Private Limited
Characteristic Company
Liability/ Risk Unlimited Unlimited liability. Limited – liability can
Exposure Partners are ‘joint arise in cases where
and severally’ liable. personal guarantees
This means that all are given or where a
partners can be sued director acts even
for a breach of though they are
contract for example, unauthorised.
or the claimant can
just sue one partner
and that partner will
then have to sue his
partners for their
share of the liability.
Finance Options Personal Finance Personal Capital Equity Finance –
Loans Loan purchase of shares
Grants Debt Finance – Loans
Grants
Ownership Sole Trader (single (you) will be one of a Company owns the
owner) owns all the number of individual assets
assets of the business who wish to work Shareholders own the
together sharing in shares of the
the profits company
Control/Management Sole trader is in full Decisions will be Directors have control
control. made together by the of the day to day
partners. business. They may
Some partners have a ‘delegate’
more active role than management rolls.
others, some can Shareholders have a
even be silent. defined role in that
they are needed for
some decision that
are of particular
importance to the
business.
The split between
directors and
shareholders must be
observed even where
the same people fulfil
both roles.
Formalities at Start None Few formalities but a Incorporation at
Partnership Companies House
Agreement should be Ongoing formalities.
made.
Direct Costs at Start Minimal Professional fees. There is a cost
companies house
fees.
Statutory Controls No specific controls. Partnership Act 1890 Mainly the
Characteristic Company
Liability/ Risk Unlimited Unlimited liability. Limited – liability can
Exposure Partners are ‘joint arise in cases where
and severally’ liable. personal guarantees
This means that all are given or where a
partners can be sued director acts even
for a breach of though they are
contract for example, unauthorised.
or the claimant can
just sue one partner
and that partner will
then have to sue his
partners for their
share of the liability.
Finance Options Personal Finance Personal Capital Equity Finance –
Loans Loan purchase of shares
Grants Debt Finance – Loans
Grants
Ownership Sole Trader (single (you) will be one of a Company owns the
owner) owns all the number of individual assets
assets of the business who wish to work Shareholders own the
together sharing in shares of the
the profits company
Control/Management Sole trader is in full Decisions will be Directors have control
control. made together by the of the day to day
partners. business. They may
Some partners have a ‘delegate’
more active role than management rolls.
others, some can Shareholders have a
even be silent. defined role in that
they are needed for
some decision that
are of particular
importance to the
business.
The split between
directors and
shareholders must be
observed even where
the same people fulfil
both roles.
Formalities at Start None Few formalities but a Incorporation at
Partnership Companies House
Agreement should be Ongoing formalities.
made.
Direct Costs at Start Minimal Professional fees. There is a cost
companies house
fees.
Statutory Controls No specific controls. Partnership Act 1890 Mainly the
