Types of Business Organisation

Sole trader advantages

100% control
Quicker decision making
Keeps all profits
Easy to set up

Sole trader disadvantages

Unlimited liability
Limited access to capital
No holiday/sick cover
Have to burden losses
Limited access to skills/expertise
Business ceases to exist on death of the owner (lack of continuity)

Partnership advantages

Shared liability
Shared responsibility
Access to more capital
Access to more skills/expertise
Shared losses.
Cover for holiday/sickness.
Easy to set up

Partnership disadvantages

Unlimited liability
Shared profits
Longer decision making
Governed by the Partnership Act 1890 (legal restrictions apply) unless a partnership agreement exists
Potential for disagreements and conflict

Private limited companies (Ltd)

At least one shareholder who tend to be a closer group of associated investors (family and friends), managed by directors who may also be shareholders.

The owners and the business are separate business entities.

Ltd advantages

Limited liability (restricted to share capital invested)
Access to greater amounts of capital

Ltd disadvantages

Loss of control where all shareholders have voting rights at AGM
Financial statements have to be filed with Companies House
Costly and time-consuming set up procedures
Restricted by legal requirements via the Companies Act 2006.
Sharing profits via dividend payments to investors.
Need to have financial statements audited

Public limited companies (Plc)

Owned by at least two shareholders - owners and the business are separate business entities.