Different Types Of Campanies

Business Studies

Sole Trader - Advantages

- Own Ideas

- Initiative

- All the profit

- Easy to set up

- Decide who to hire

- Keep accounts private

- Choose your own name

- Personal style of management

- Take own holidays

- No share holders

- Minimum politics

Sole Trader - Disadvantages

- Increased risk

- Responsible for your own actions

- Capital requirement

- Increased pressures

- More isolated

- Reduced support

- More expensive

Being a sole trader is the easiest way to set up your own business, you will need to write up a business plan showing you have thought about your market this means if your product will succeed in your selected location. An example of a sole trader would be an Ice-Cream man, or a florist. These two examples are sole traders because they are self employed and do not need to hire many employee's as they would not get that many customers, they also do not have any share holders which means total control. In a sole trader company, it would involve just the one owner, and he would work for himself, therefore gaining all the profit. A sole trader does not have a large market as it is only a small firm and can't afford to keep up with all the latest marketing ways.

Partnership - Advantages

- Less expensive

- Shared risk

- More support

- Less pressure

- Debt shared equally between all owners (advantage if you put more money into the company)

Partnership - Disadvantages

- Less power

- Shared ownership

- Debt shared equally (disadvantage if you own less)

- Benefits shared

- Less profit

An example of a partnership could be a dentist, or an engineer. For a partnership to be formed you will need two to twenty people involved in the company. By being involved this means investing in the company and helping out in the work load. First you will need to prove to the bank that you will eventually be able to pay back loan by providing a business plan showing your location and market is good and you will be making earning enough to make a profit and therefore pay back the bank. The size of a partnership would be small but larger than a sole trader. There market would be larger and they would need to hire some staff but not many. The profit made by the company would be split depending on how much each co-owner owns, the owner who put more money in would get the greater profit. Although the most powerful owner gets most of the profit and more power, the debt would be split equally among all of the owners.

L.T.D - Advantages

- Shares can only be sold to friends and family

- Widespread support

- More investment opportunities

- Better cash flow

- More financial strength

L.T.D - Disadvantages

- Less control

- More dependable on others

- Responsible to shareholders

- More dependent

on others

- Not as easy to get your own way, there is other peoples ideas to consider

- Increased cost

An example of a L.T.D would be Chelsea football club, this is a L.T.D as the current owner has bought all of it and so there is one owner. This company would be very large, world wide even. It would also hire within the thousands as the company is so big. Due to the size of the company there marketing would be a major part in the company's profit, as there is so much competition they will need to keep up with the latest marketing ideas. The profit would go to the single owner and all the people who have bought shares in the club. For you to be the single owner you would need to completely buy the whole organization, for example "Abromovic" with Chelsea Football Club, but this does not mean total power as there will be many share holders to answer to.

P.L.C - Advantages

- Widespread support

- More investment opportunities

- Better cash flow

- More financial strength

- Less cost due to share holders

P.L.C