Text Presentation Plan Business Organizations in the uk Different organizational forms of business organizations in the uk

sole trader partnership registered company

sole trader

Advantages partnership disadvantages

registered company

Registered company and its sub-types

Limited liability Unlimited liability

company company

Company limited

by guarantee Company limited

by shares

Private and public companies limited by shares

private companies public companies

differences

Text Presentation Business Organizations in the uk

The heading and therefore the subject of the text is Business Organizations in the UK. The author considers the subject under the following headings: firstly different organizational forms of business organizations in the UK, secondly advantages and disadvantages of different organizational forms, then the registered company and its sub-types: unlimited liability company and limited liability company, next the forms of limited liability company: the company limited by guarantee, and the company limited by shares and finally the differences between public and private limited companies.

Let me start with the first point: different organizational forms and underline that the author distinguishes three basic types: the sole trader, the partnership and the registered company. The author gives the definition of these organizational forms.

Thus, the sole trader business is legally owned and controlled by one person. The partnership is a business owned by two or more partners who share the profits and losses. The registered company is an organization that makes or sells goods or services to make a profit. Now we can focus on the advantages and disadvantages of each type. Let’s firstly underline the advantages: among the advantages of the sole trader we can name the next ones: the sole trader has great freedom, can employ other people, retains all the profits. The partnership allows for an increased capital base, improved borrowings and reduces the problems relating to holidays and sickness. Advantages and disadvantages of the registered company depend on the sub-type of the company. In the case of a limited liability company the shareholders have limited liability, if it is an unlimited liability company the shareholders loss all their money if the company goes bankrupt.

A few words about disadvantages. The author outlines the following ones. The sole trader suffers disadvantages including: limited company, limited borrowing, problems with holiday and sickness, and limited scope for expansion. The partnership is not separate legal person under the law, and partners are jointly liable for the debts and obligations of the partnership without limit; and jointly and independently for torts committed by partners and employees of the firm.

Now I’d like to go on to the registered company and its sub-types. The author tells about limited liability company and its sub-types: company limited by guarantee and company limited by shares and unlimited liability company. The company limited by guarantee is a company where shareholders are responsible for paying debts up to a certain amount if the company goes bankrupt. The company limited by shares is a company where shareholders are responsible for paying debts up to the amount of their unpaid shares, if the company goes bankrupt.

And finally I’d like to brief on private and public companies and differences between them. A private company is a company owned by people or other companies; a company whose shares are not openly traded and can only pass to another person with an agreement of other shareholders.

A public company is a company owned by people or other companies; a company whose shares are openly traded. It is important to highlight the differences between public and private companies:

• the private company has the word Limited (Ltd), whereas the public company has the words Public Limited Company (PLc)

• the private company may have one director whereas the public company must have at least two

• there are not age limits for the directors of the private company unless the company is a subsidiary of a public company

• the company secretary of a private company does not need formal qualifications, whereas the company secretary of a public company does

• private companies are less strictly regulated, including: restrictions on loans to directors, and regulation of raising and maintenance of capital

• the starting capital for a public company is Ј50000, whereas a private company can commence trading immediately.

Having considered three main types of business organizations and their sub-types, their advantages and disadvantages we came to the conclusion that the first decision that must be made by those considering incorporation of a business is the type of company that will be suitable.