types of business ownership

1. Write a paragraph to briefly explain the different types of business ownership
 Sole trader
 Partnership
 Private limited company
 Limited company
 Government based company
 Franchise
 Co-operatives

There have seven types of business ownership. First a sole trader, sole trader is a person who
sets up and owns their own business. They may decide to employ other people but they are the
only owner. A sole trader has unlimited liability. As a sole trader, your business is owned entirely
by you, grown by you and ultimately succeeds or fails by you. This also means you are entitled
to all profit that the business makes. Becoming a sole trader is simple. All you have to do is
register your business name and you can start trading. There are huge incentives to becoming a
sole trader but with them come terrifying or - depending on your personality - gratifying, side
effects.
Second a partnership, a partnership is a single business where two or more people share
ownership. Each partner contributes to all aspects of the business, including money, property,
labor or skill. In return, each partner shares in the profits and losses of the business. Because
partnerships entail more than one person in the decision-making process, it’s important to discuss
a wide variety of issues up front and develop a legal partnership agreement. This agreement
should document how future business decisions will be made, including how the partners will
divide profits, resolve disputes, change ownership (bring in new partners or buy out current
partners) and how to dissolve the partnership. There are three general types of partnership
arrangements, general partnerships, limited partnerships and joint ventures.
Next is private limited company, these are closely held businesses usually by family, friends
and relatives. Private companies may issue stock and have shareholders. However, their shares
do not trade on public exchanges and are not issued through an initial public offering
Shareholders may not be able to sell their shares without the agreement of the other shareholders.
Limited Liability: It means that if the company experience financial distress because of normal

business activity, the personal assets of shareholders will not be at risk of being seized by
creditors. Continuity of existence: business not affected by the status of the owner. Minimum
number of shareholders need to start the business are only 2.

A limited company is a business that has been registered in such a manner as to ensure that
its owners have limited liability. The business is owned by its shareholders and operated by
directors. A private limited company must have at least one director and a secretary. A limited
company may not be listed on the Stock Exchange, unlike a Public Limited Company (PLC). A
limited company is a business that is owned by its shareholders, run by directors and most
importantly whose liability is limited.
Government based company, government business enterprise, or commercial government
agency is a legal entity created by a government to undertake commercial activities on behalf
of an owner government. Their legal status varies from being a part of government to stock
companies with a state as a regular stockholder. There is no standard definition of a governmentowned corporation (GOC) or state-owned enterprise (SOE), although the two terms can be used
interchangeably. The defining characteristics are that they have a distinct legal form and they are
established to operate in commercial affairs. While they may also have public policy objectives,
GOCs should be differentiated from other forms of government agencies or state entities
established to pursue purely non-financial objectives.
Franchising is the practice of using another firm's successful business model. A type of
license that a party (franchisee) acquires to allow them to have access to a business's (the
franchisor) proprietary knowledge, processes and trademarks in order to allow the party to sell a
product or provide a service under the business's name. In exchange for gaining the franchise, the
franchisee usually pays the franchisor initial start-up and annual licensing fees. Franchises are a
very popular method for people to start a business, especially for those who wish to operate in a
highly competitive industry like the fast-food industry. One of the biggest advantages of
purchasing a franchise is that you have access to an established company's brand name; meaning
that you do not need to spend further resources to get your name and product out to customers.

Lastly is co-operative, a cooperative is a member-owned business organization with at least
five shareholders, all of whom have equal voting rights regardless of their level of involvement
or investment. However, every shareholder is expected to help run the cooperative. Like a
company, a cooperative is a separate legal entity and shareholders, directors, managers and
employees are not liable for any debts incurred unless those debts are the result of flagrant
recklessness, negligence or fraud. Cooperatives promote a democratic style of management and
promote the concepts of sharing resources and delegation to increase competitiveness. A
cooperative usually only allows a limited distribution of profits to members/shareholders (some
don't allow any). They are formed primarily to provide a service to members rather than any
financial gain.