Business AT1- Factors influencing legal structures

Size

• Most businesses start as a sole trader or partnership

• As they expand they may want to become a private or public company to have limited liability (protected legally)

Ownership

• To have full ownership you will need to be a sole trader

• If wanting to share ownership, partnership are appropriate and private companies to have limited liability

• If the business becomes a public company, to maintain control, they should have 51% or more ownership

Finance

• Sole traders and partnerships rely or personal savings, money from family and friends, credit cards, bank loans etc

• Venture capital is when investors invest money for a portion of the company

• If a business wants to expand, they become wither private or public to gain investors and shareholders

Factors influencing legal structure

Size, ownership and finance