Types of Business organization.ppt

* * * * * * * * * Business Law：an Introduction Outcome 3 Introduction Distinguish the legal characteristics of the various types of business organisations and relationships. Knowledge and/or skills The distinction between sole traders, partnerships and incorporated bodies The advantages and disadvantages of incorporation and formation General legal provisions relating to the running/management of incorporated bodies Implications of contractual arrangements on incorporated bodies The authority and liability of partners The rights and duties of agents and principals Contents: page 196. Types of business enterprises Sole bodies trader Partnership Incorporated The veil of incorporation The incorporation procedure Contractual capacity of the incorporated body Dissolution. Part 1 Legal differences between Sole Trader, Partnerships and Incorporated Bodies. 3.1 Types of Business Enterprise See Figure on page 197. Business Private Sector Public Sector Sole trader Partnership Private Limited Company Public Limited Company Public Corporation Local Authorities Unlimited liability With limited liability Sole Trader Definition: A sole trader is s person carrying on business with total legal responsibility for his/her actions. Advantages: No formal procedures are required to set up. Nobody is needed to be consulted or revealed the state of the business. Personal supervision by the sole trader should ensure its effective operation. All the profits of the business accrue to the sole trader. Sole Trader Disadvantages: The same legal entity. Further capital is usually only possible by ploughing back the profit of the business. The business has a high dependence on the individual. The death of the proprietor may make it necessary to sell the business. The individual may only have one skill. Disadvantages associated with small size, lack of diversification, the problems of raising finance etc. Partnership: a) Unlimited partnership Definition: Partnership is the relat