Five Types Of Major Law Company Business Partnership Essay

Published Date: 02 Nov 2017

Business Organisations

Sole Trader: The most general form of business organisation in the UK is sole trader. There are lot of sole traders in the UK, which may be thousands in numbers. They indulge in quick and wide variety of business across different sectors of the economy.

Some examples of sole traders are:

Off license shops

Dry cleaners

Newspaper agents

Small cafes

Private Limited Companies: The Private Limited Companies are a form of business organisation, which are commonly under the control of a family. Share holders own the company who are usually the directors as well as the employees of the company. These companies provide a wide variety of services.

Some examples of Private limited companies are:

Warburton’s

New Look Retailers Ltd.

Public Limited Companies: The Public Limited Companies constitutes the major companies in the UK. These companies are generally owned by share holders and the daily businesses of the companies are controlled by Directors. The general public can buy the shares of these companies.

Some examples of Public limited companies are:

Boots

Marks and Spencer’s

Sainsbury’s

Partnerships: Partnerships are a form of business organisation which was quite common in the UK. Partnerships include two or more persons in the business, in which each are partners. The responsibilities of the business are controlled by partners. It is quite similar to sole traders with the only difference being that there will be more than one owner of the business.

Some examples of Partnerships are:

John Lewis

Arsenal Football club.

Limited Liability Partnership: Limited liability partnerships is a form of business organisation which is quite similar to partnership but with a difference, which is that if the company goes into liquidation, then the partnership property can only been taken by the liquidator, not the personal property of the partners.

Some examples for Limited Liability Partnership are:

Price Waterhouse Cooper

Herbert Smith

Norton Rice

Clifford Chance

Advantages and Disadvantages of Business Organisations

Advantages and Disadvantages of Sole Trader

Advantages of Sole trader are:

The business can be easily built up.

There is high flexibility in the business, as one can decide the hours of work and the days for work.

The decisions regarding the business can be easily made, as there is only one person.

The capital required to start the business is quite little.

Sole traders are self employed. So he is his own boss which ultimately means that he does not have to take any orders from anyone.

All the profits from the business is taken by the owner and he can decide where he can use the money from the profit.

Disadvantages of Sole trader are:

The liability is unlimited in this form of business organisation.

There is a limit to the amount of capital that can be raised and in case of sole trader there can be a difficulty in finding the capital.

The loans and finances in case of sole trader can be expensive compared to private limited companies.

High Street competition: There will be high competition in the high street.

If the owner suffers from illness, the business will also suffer which may keep the business at risk.

Long hours: The sole traders have to work long hours in order to compete the competitors.

A sole trader cannot increase the price of products, even if the large organisations increase the price as this would affect the business of sole traders.

Advantages and Disadvantages of Partnerships

Advantages of Partnerships are:

Partnerships have the ability to raise higher capitals.

Partnerships apply quite really well to specialised businesses.

In partnerships the knowledge and the responsibilities can be shared between the partners in the business, which would reduce the work load,

Partnerships can be built up quite easily in a broader way.

Even if there is a chance of illness to one of the partners, the chance of the business is quite high compared to the case of sole trader which has a high chance of risk.

The profits in case of partnership are kept private, which means the profits of the business are not disclosed.

Disadvantages of Partnership are:

The liability is unlimited unless it is an LLP.

In partnership all the partners are liable for debt, which means if the business goes in to liquidation the personal property of the partners can be taken by the liquidator.

In Partnerships there are limits on access to capital.

One of the most important disadvantage of Partnerships are that there is a high risk of relationship breaking between the partners in the business which could ultimately result in the breaking of partnership.

If one of the partners dies or leaves the partnership, then it means that this partnership ends and the remaining partners have to start the partnership all over again.

Advantages and Disadvantages of Private Limited Companies.

Advantages of Private Limited Companies are:

Private limited companies will be able to raise a huge amount as capital for their business.

Limited liability: If the company goes into liquidation, then the liquidator can only take the property of the business not the personal property of the share holders.

In case of Private limited companies the ownership of the business can be transferred. This means that if the share holder or the owner dies the business can continue unlike the case of Partnerships or Sole traders.

There is a high flexibility in determining the proportion of salary and dividends that can be taken.

Disadvantages of Private Limited Companies are:

Private limited company requires a lot of capital to set up which means it is costly.

Starting a private limited company can be time consuming to set up.

The accounts in case of private limited companies are far more complex than other forms of business organisations.

Limited liability is a major advantage, but in practice the situation is far more complex. In small companies banks mostly provide the money and the banks only gives money if the share holder gives their personal property as a guarantee. So this could mean that if the company goes into liquidation the bank can take the personal property of the share holders which has been given as a security.

The business rates are high.

The competition in this field is quite fierce as in the case of a sole trader.

The business rents in this case would be quite severe.