Forms of Business 18. Forms of Business The four main forms of business organisation are: Sole...
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Transcript of Forms of Business 18. Forms of Business The four main forms of business organisation are: Sole...
Forms of Business
18
Forms of Business
• The four main forms of business organisation are:
Sole Trader
Private Limited Company
Co-operative
Semi-State Company
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Forms of Business
• The Sole Trader is a person who owns and runs his or her own business
• Advantages of being a sole trader
A sole trader business is easy to form
A sole trader has lower costs
Decisions can be made quickly
The sole trader has flexible trading hours
The sole trader keeps all the profits
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Forms of Business
• Disadvantages of being a sole trader
A sole trader has unlimited liability
The sole trader must provide all the capital
The sole trader is responsible for all parts of the business
Prices are higher than inother forms of business
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Forms of Business
• A private limited company is formed when between 1 and 50 people join together to set up a business with limited liability
The people who put money into the new business are called shareholders
The total amount invested in the business is called the capital
The company name is followed by the letters Ltd
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Forms of Business
• Limited Liability means that if a private limited company goes bankrupt, i.e. has debts which they are unable to pay back, the shareholders will only lose the amount they have invested in the company.
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Forms of Business
Advantages of a Private Limited Company
The business owners have limited liability
It is easy to raise money to expand the business
Decisions making can be shared
It is possible to attract the best managers and employees
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Forms of Business
• A number of documents are required when setting up a limited company.
1. Form A1 which contains:
The name and registered address
The names, addresses and occupations of the directors
A written promise from the directors to be a director and run the company properly
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Forms of Business
Documents required setting up a limited company
2.Memorandum of Association which contains:
The name of the business
The objectives of the business i.e. what it was set up to do
The amount of capital invested in the business
The names of the directors of the new business
A statement that the business has limited liability
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Forms of Business
Documents required setting up a limited company
3.Articles of Association which contains:
The name of the business
The amount of share capital in the business
The number of directors in the company and how they are elected
The procedure for calling company meetings
The voting rights for each type of share in the business
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Forms of Business
The Co-operative
•Co-operatives are organisations formed by people who join together to achieve a particular objective which they could not achieve on their own.
•There are various types of co-operative:
Producer Co-operative
Retail Co-operative
Worker Co-operative
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Forms of Business
State Ownership
•State Ownership refers to companies and organisations owned by the State (Government) and known as semi-state companies or state-sponsored bodies.
•These businesses provide goods and services for consumers and examples include the ESB
and Bord Gais.
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Forms of Business
• Importance of state involvement in business are:
Essential services will be available in all parts of the country
The country’s natural resources will always be owned by the people
The government may receive regular dividends
They provide a lot of employment
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