There are many business types of organisation, these all have their advantages, so it is important to know which is better for which task, otherwise a company may find some aspects harder than they should be. The main business types are;
Business Types [icon name=icon-building]
- A Sole Trader is a business owned by an individual, It can have many employees. Common sole traders could be corner shops or man-with-van businesses.
- A Partnership is a business owned by two or more people (usually up to 20), the ownership of the business is split between them. A partnership may be a small manufacturing company or some large accountancy firms have larger quantities of partners.
- A Franchise is a business that is owned by a franchisor, and the licensing to use the brand name is given to the franchisee to sell products under their name. Common examples would be fast food restaurants or garages.
- A Private Limited Company (or ‘LTD’) is a company that offers shares, but does not sell them to the general public. Generally they will have either small amounts of capital, or very large amounts. The size of the business can vary, and can be a multinational company or a medium sized business.
- A Public Limited Company (or ‘PLC’) is a company that sells it’s shares on the stock exchange, allowing members of the general public to invest capital into the business.
- A Co-operative is a business set-up to serve the public, and may have ethical goals, over profits and sales. Some supermarkets work in this way.
- A Social Enterprise is a business who’s money goes toward a social goal(s). Examples would be a company supporting people with an illness or disease.
- There are also Lifestyle Businesses who’s owners work as part of their lifestyle. This can depend on the characteristics of the entrepreneur.
Most of these business types operate on two different types,
- Limited Liability is when only the Business assets can be taken to recover debt. Limited Liability is where the owner is protected from any trouble the business suffers, and vice versa.
- Unlimited Liability is when the business is not protected from such problems, and if the business were to get into financial trouble or insolvency, then the owners assets could be taken as a circumstance.
An LTD (Private Limited Company), must send a Memorandum of Association and Articles of Association. To receive a Certificate of Incorporation and Limited Liability. Becoming Incorporated means that the company and the owner are seen as two separate entities legally.
To be Unincorporated, would mean that the business and the owner are seen as one legal entity.