Types of business organisation

Sole trader

A business owned by one person.

Limited liability

Limited liability means that the liability of shareholders in a company is limited to the amount they invested.

Unlimited liability

Unlimited liability means that the owners of a business can be held responsible for the debts of the business they own. The liability is not limited to the investments they made in the business.

Partnership

A form of business in which two or more people agree to jointly own a business.

Partnership agreement

The written, legal agreement between business partners. It is not essential for partners to have such an agreement, but it is always recommended.

Unincorporated business

A business that does not have a separate legal identity. Sole traders and partnerships are unincorporated businesses.

Incorporated businesses

A business that has separate legal status from its owners.

Shareholders

The owners of a limited company.

Private limited company

A business owned by its shareholders but it cannot sell shares to the public.

Private limited company

A business owned by shareholders but it can sell shares to the public and its shares are tradable on the stock exchange.

Annual General Meeting (AGM)

A legal requirement for all companies. Shareholders may attend and vote on who they want on the Board of Directors for the coming year.

Dividends

Payments made to shareholders from the profits (after tax) of a company. They are the return to shareholders for investing in the company.

Franshise

A business based on the use of the brand names, promotional logos and trading methods of an existing successful business. The franchisee buys the licence to operate the business from the franchiser.

Joint venture

When two or more businesses start a new project together, sharing capital, risks and profits.

Public corporation

A business in the public sector that is owned and controlled by the state (government).