Core 1- legal entity types

Sole Trader

Easy to set up

Owner makes all decisions

Difficult for business to grow due to amount of money available

No one to share responsibility with

Unlimited liability

Partnership

Greater capital investments available

Bring different skills

responsibility shared

Decision-making can be time-consuming as all need to agree

Unlimited liability

Limited Liability Partnership (LLP)

Separate legal identity (limited liability)

Must disclose finances with companies house

accounts must be audited

shares not available to general public

Private Limited company

Owned by 2-50 shareholders

Limited liability

Must register with companies house for incorporation

bigger public image

costly to set up

Public Limited Company (PLC)

Owned by minimum of 2 shareholders no maximum

Separate legal identity

minimum share capital of £50,000

Bigger public image

Costly to set up

need to publish annual accounts

possibility of takeover if enough shareholders try to purchase shares

Franchise

limited business and industry experience are required

easier to raise finance

easier to gain customers

expensive initial and ongoing costs of operating

difficult to break into new area if competing with other businesses

Co-Operative

Lower costs

difficult to compete with large providers

each owner has very little operational control because there’s so many owners

Community Interest company (CIC)

Limited liability

Easy to set up

quicker to set up than a charity

doesn’t receive the same tax concessions as a charity

costs of incorporation are expensive

restrictions on dividends

Charity

Limited liability if CIO (Charitable Incorporated Organisation)

Easy to set up

Lower business rates

Must submit returns to the charity commission and companies house

Dependent on volunteers

Trustees are not paid