Business Features and Ownership Structures

Features of businesses 

Characteristics or attributes that make up an organization  

• Ownership type 

• Size 

• Purpose  

• Target market 

Ownership 

• Private sector 

• Public sector 

• Non profit  

• Sole trader  

• Partnerships 

• Private limited company ltd limited liability   

• Public limited company plc unlimited liability  

• Cooperatives  

Sole trader ad v dis  

Advantages 

1. Cheap and easy to set up  

1. All profits for sole trader  

1. Can make decisions  

1. Financial records remain private 

1. Full Control – The owner makes all business decisions and can act quickly without needing approval. 

1. Easy to Set Up – Simple registration and minimal administrative requirements make startup straightforward. 

1. Retention of Profits – All profits belong entirely to the owner, providing direct financial reward. 

1. Privacy – Financial details remain private, reported only through personal tax filings. 

1. Flexibility – The business can adapt quickly to changes in the market, work hours, pricing, or products/services. 

1. Disadvantages 

1. Unlimited Liability – The owner is personally responsible for all business debts, risking personal assets. 

1. Difficulty Raising Finance – Limited ability to secure loans or attract investors. 

1. High Workload and Stress – The owner manages all aspects of the business, which can be demanding. 

1. Tax Inefficiency – Profits are taxed at personal income rates, potentially higher than corporate rates for large profits. 

1. Business Continuity Issues – The business relies entirely on the owner; illness, retirement, or death can disrupt operations. 

Partnerships 

Shared Expertise and Complementary Skills – Partners bring diverse skills and experiences, allowing better decision-making and more effective problem-solving  

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Pooling of Resources – Combining financial, human, and physical resources can make the business stronger and enhance growth potential  

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Shared Workload and Responsibilities – Responsibilities are divided, reducing stress and allowing partners to focus on their strengths  

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Access to Additional Capital – Multiple partners can provide more starting capital and improve borrowing capacity  

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Tax Advantages – Partnerships often benefit from pass-through taxation, avoiding double taxation and simplifying tax filings  

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Flexibility in Management – Partners can design governance and operational structures that suit their business style without strict corporate formalities  

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Improved Work-Life Balance – Shared responsibilities allow partners personal time off while maintaining business continuity  

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Increased Business Opportunities and Networks – Partners bring contacts, industry knowledge, and ideas for business development  

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Privacy of Financial Information – Unlike limited companies, partnerships do not need to publicly disclose financial statements, maintaining confidentiality  

1 

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Ease of Conversion – Partnerships can be converted into a limited company or LLP if needed for liability or tax reasons  

2 

Disadvantages of Partnerships 

Unlimited Personal Liability – In general partnerships, each partner may be personally liable for the business debts and actions of other partners  

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Potential for Conflict – Differences in goals, work styles, or decision-making can lead to disputes  

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Shared Profits – Profits must be divided among partners, which can create disagreements or resentment  

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Less Individual Autonomy – All major decisions typically require consensus, which can slow decision-making and limit personal control  

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Exit Strategy Complications – Selling a share of the business, or a partner leaving, can be legally complex without a clear agreement  

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Business Continuity Risk – Death, retirement, or withdrawal of a partner could disrupt the business  

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Difficulty Raising Large-Scale Capital – Partnerships may find it harder than corporations to attract investors due to the lack of shares  

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Inequitable Contributions – Unequal work, effort, or capital contribution can lead to resentment and operational inefficiency  

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Limited Prestige – Some clients or investors may perceive partnerships as less formal and less stable compared to limited companies  

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Tax and Compliance Issues at High Profits – While pass-through taxation is simple, higher profits may not be as tax-efficient as a limited company structure 

Unlimited non stop endless no end point limitless boundless  

Liability responsibility accountability legal responsibility burden  

Private limited company  

Advantages  

• minimum 1 director 1 shareholder 

• limited liability 

• private circulation of shares                          

• cannot offer shares to public 

• name must end ltd or pvt ltd 

• must register with companies house 

• memorandum and articles of association required 

• annual filing with financial statements 

• corporate tax payable 

• separate legal entity 

• transfer of shares restricted 

• board meetings recommended 

• can enter contracts in company name 

• employment of staff allowed 

• banking in company name 

Disadvantages  

• minimum 1 director 1 shareholder 

• limited liability 

• private circulation of shares 

• cannot offer shares to public 

• name must end ltd or pvt ltd 

• must register with companies house 

• memorandum and articles of association required 

• annual filing with financial statements 

• corporate tax payable 

• separate legal entity 

• transfer of shares restricted 

• board meetings recommended 

• can enter contracts in company name 

• employment of staff allowed 

• banking in company name 

Public limited company  

Advantages 

   Sell shares to raise faineance  

• Limited liability  

• Separate legal identity  

• More capital can be raised through sales of shares i.e. a football team  

Disadvantages 

Financial recodes are all public knowledge  

Expensive to set up i.e. minimum of 50k to start  

• Lack of privacy as financial performance is available for all to view even competitors  

• More complex to set up due to increased legal requirements and  ongoing administrative costs  

• Loss of control as share holders have voting rights within the company as they are partial owners  

• Risk of hostile takeovers if someone can obtain 51% of the shares             

Cooperative  

• A  cooperative is a business that is owned and controlled by the people who use its products supplies or services  

• They vary in type and membership size but are all formed to meet the specific objectives of all members  

• Its owned by its members who all get a equal say is the direction of the business  

Private sector  

Owned and controlled by people not the government they're focus is making a much money possible for themselves they are likely to take loads of risks to make sure they can maximize there profits   

• Is the sector of the economy that is owned and controlled by individuals or groups of individuals rather than the government  

• Owners of these businesses are likely to take risks as they are in a business to make profits  

                Public sector 

Not about profit its about doing good for the community they are the least risk takers just here to push the economy and society 

• Is the sector of the economy that is owned by the gov rather than individuals or groups of individuals 

• These businesses may have been set up by the government or brought by them from the private sec for investments or to save them from financial ruin i.e. buying banks during recession   

• Less likely to take risks than businesses in the private sector as they aim to benefit the public  

Not for profit  

To give  back and do good for society any profit made is spread into a need never is it saved nor for personal use  

• They have an objective to do good for society and any surplus made is ploughed back into achieving that goal  

• These businesses seek to make enough money and to cover wages  

• Voluntary organizations are also non profits