There Are Three Main Different Forms Of Business Organisations:.

1410 Words6 Pages
There are three main different forms of business organisations: • Sole Trader • Partnership • Companies Sole Trader: A sole trader is an individual owner of a business. There is a risk vs reward system in place with sole trader as they reap all rewards in the form of revenue and profits but is also entirely liable for all the losses in the business. Characteristics of a sole trader: With regards to the characteristics of this business organisation, sole traders are accountable for the legal and financial elements of the organisation. This means debts and legal issues within the organisation are passed to and dealt with by the owner. As the organisation is controlled by one person, the sole trader makes all decisions within the…show more content…
Sole traders are expected to solely and innovatively increase wealth and expand. This can be hard as there is no range of perspectives/expertise to utilise within the organisation. Sole traders must motivate, pay and communicate with employees as any company would, but on their own. Sole traders possess substantial accountability of unlimited liability for losses accrued by the business. Partnership: As defined in section 1 of the Partnership Act 1890, “partnership is the relation or association which subsists between persons carrying on a business in common with a view of profit” . Partners also share the business’s profits, and each partner pays tax on their share . Characteristics of a partnership: The characteristics of a partnership draw stark parallels to that of a sole trader. For instance; • Partners are equally and individually responsible for the arrears of the partnership. • Partners can withdraw monies from the business for personal usage. • No fewer than two people who run and/or own a business, agreeing to equally share risks and rewards of the business. • Should a partner pass away, a general or limited partnership ends and is dissolved. No continuous succession in the business. There are three forms of partnership: • Limited, • General and • Limited liability partnerships (LLPs) Characteristics of a limited partnership: • Decreed by the Limited Partnerships Act 1907, the partnership is not a separate legal entity. • Although,

More about There Are Three Main Different Forms Of Business Organisations:.

Get Access