BUSINESS STUDIES (7115)
CH#4
Sole traders: a business owned and operated by one
person
o Very few legal requirements
o Business registration is needed and annual accounts should
be sent to government
Advantages:
o Simple setup
o Few legal requirements
o No sharing in profits
o Full autonomy/ authority
o Complete control
Disadvantages:
o No one to discuss ideas with
o No one to share workload with
o In case of loss, all loss to one owner
o Expansion restricted because of small setup
o If the owner dies the business is finished
o Unlimited liability
o Unincorporated business
Partnerships: a business owned by two or more persons
jointly
o Very few legal requirements
o Partnership agreement is made for startup
o Business registration is needed and annual accounts should
be sent to government
Advantages:
o Very few legal requirements
, o Simple setup
o Sharing of capital by partners
o People to discuss problems with
o People to share workload with
o In case of loss it will be shared by partners
Disadvantages:
o No full authority/ autonomy
o Unlimited liability
o Sharing of profit by partners
o Expansion is restricted because of small setup
o Unincorporated business
Private limited business: businesses owned by
shareholders but they cannot sell shares to the public
o Incorporated business
o A separate legal unit. Remains even if the owner die
o Accounts separate from the personal accounts of the owners
o Can make legal agreements
o Jointly owned by people who have invested
o The owners buy shares of the company, that’s why they are
called shareholders
o Directors are the owners with maximum shares
o Shares cannot be sold to general public
o It has limited liability
o Significant amount of legal requirements
o Not possible to raise large sums of capital due to limited
shares
Public limited companies: business owned by
shareholders but they can sell shares to the public and their
shares are tradeable on the stock exchange
CH#4
Sole traders: a business owned and operated by one
person
o Very few legal requirements
o Business registration is needed and annual accounts should
be sent to government
Advantages:
o Simple setup
o Few legal requirements
o No sharing in profits
o Full autonomy/ authority
o Complete control
Disadvantages:
o No one to discuss ideas with
o No one to share workload with
o In case of loss, all loss to one owner
o Expansion restricted because of small setup
o If the owner dies the business is finished
o Unlimited liability
o Unincorporated business
Partnerships: a business owned by two or more persons
jointly
o Very few legal requirements
o Partnership agreement is made for startup
o Business registration is needed and annual accounts should
be sent to government
Advantages:
o Very few legal requirements
, o Simple setup
o Sharing of capital by partners
o People to discuss problems with
o People to share workload with
o In case of loss it will be shared by partners
Disadvantages:
o No full authority/ autonomy
o Unlimited liability
o Sharing of profit by partners
o Expansion is restricted because of small setup
o Unincorporated business
Private limited business: businesses owned by
shareholders but they cannot sell shares to the public
o Incorporated business
o A separate legal unit. Remains even if the owner die
o Accounts separate from the personal accounts of the owners
o Can make legal agreements
o Jointly owned by people who have invested
o The owners buy shares of the company, that’s why they are
called shareholders
o Directors are the owners with maximum shares
o Shares cannot be sold to general public
o It has limited liability
o Significant amount of legal requirements
o Not possible to raise large sums of capital due to limited
shares
Public limited companies: business owned by
shareholders but they can sell shares to the public and their
shares are tradeable on the stock exchange
