LECTURE 2: BUSINESS OWNERSHIP - CHARACTERISTICS &
TYPES
BUSINESS OWNERSHIP
Learning objectives for the lesson
At the end of this lesson, the learner should be able to;
1. Describe characteristics, advantages and disadvantages of sole-proprietorship
2. Describe characteristics, advantages and disadvantages of partnership
3. Explain the characteristics, advantages and disadvantages of a company
4. Distinguish private company from public company.
Introduction
When enterprises establish a business, they must decide on the form of business ownership.
There is no single form that can be said to apply to all individuals, but the person venturing
into business need to first consider the following factors.
• Formation requirements
• Ease of creation
• Flexibility
• Expenses to start and maintain
• Legal requirements
• Government control and regulation
• Income taxes consequences
• Liability
1. Sole Proprietorship
This is a business owned and run by one person. The sole proprietorship is by far the simplest
and easiest way for an entrepreneur to do business. In reality, a sole proprietorship is not even a
legal entity at all.
✓ The term is used to imply an individual who is self-employed and operates a business
alone, but in practice a sole trader rarely work alone in most cases he/she will bring in
other staff to help operate the business.
, ✓ The sole trader accepts all the responsibility for the management and finances of the
1
TYPES
BUSINESS OWNERSHIP
Learning objectives for the lesson
At the end of this lesson, the learner should be able to;
1. Describe characteristics, advantages and disadvantages of sole-proprietorship
2. Describe characteristics, advantages and disadvantages of partnership
3. Explain the characteristics, advantages and disadvantages of a company
4. Distinguish private company from public company.
Introduction
When enterprises establish a business, they must decide on the form of business ownership.
There is no single form that can be said to apply to all individuals, but the person venturing
into business need to first consider the following factors.
• Formation requirements
• Ease of creation
• Flexibility
• Expenses to start and maintain
• Legal requirements
• Government control and regulation
• Income taxes consequences
• Liability
1. Sole Proprietorship
This is a business owned and run by one person. The sole proprietorship is by far the simplest
and easiest way for an entrepreneur to do business. In reality, a sole proprietorship is not even a
legal entity at all.
✓ The term is used to imply an individual who is self-employed and operates a business
alone, but in practice a sole trader rarely work alone in most cases he/she will bring in
other staff to help operate the business.
, ✓ The sole trader accepts all the responsibility for the management and finances of the
1
