Types of Business organization( Sole trader
& Partnership)
1) Private sector: All profit –making businesses that are not run or operated by the government or
private sector organizations. Sole traders and partnerships are small businesses that are part of the
private sector. For example: grocery store, shopping mall, restaurant, etc.
2) Public Sector: Public Sector Organizations are operated by the government. They usually provide a
service rather than aiming to make a profit, unlike Private Sector Organizations. These organizations are
financed from the taxes that have been paid by companies and individuals. For example: Public hospital,
libraries, transport service, etc.
3) Sole Trader: Sole tradership is the easiest form of business organization to set up. A sole trader is an
individual trading alone under his or her own name, or under a trading name. The sole trader is fully
responsible for the running of the business. He or she is the only financial beneficiary of its success, but
he or she is also financially responsible for its failure.
4) Partnership: A partnership is defines as having between two and 20 owners. These owners have
unlimited liability. A contract that is called deed of agreement is usually drawn up to show how profits
and losses are shared.
5) Limited Companies: Companies in the private sector that wish to expand can go through the process
of incorporation. This allows the business organization to create its own legal identity. This means, by
law, that the owners of the business and the company are now separate. There are 2 types of limited
companies: Private Limited (LTD) & Public Limited (PLC).
In the UK. A limited company must be registered with the register of Companies and comply with he
Companies Act 2006, to have separate legal status.
Sole Trader
What is the meaning of the term “unlimited liability”?
The owner and the business are created the same in terms of the legal status of a sole trader. This is
called unlimited liability. If a sole trader is unable to meet its financial obligations and cannot pay bills, a
court has the authority to hand over the sole trader’s personal assets to any creditors to cover these
debts.
What are the advantages & disadvantages of Sole Tradership?
Advantages:
1) Business is easy to set up
2) Sole trader keeps all the profit
3) Sole trader has complete control
& Partnership)
1) Private sector: All profit –making businesses that are not run or operated by the government or
private sector organizations. Sole traders and partnerships are small businesses that are part of the
private sector. For example: grocery store, shopping mall, restaurant, etc.
2) Public Sector: Public Sector Organizations are operated by the government. They usually provide a
service rather than aiming to make a profit, unlike Private Sector Organizations. These organizations are
financed from the taxes that have been paid by companies and individuals. For example: Public hospital,
libraries, transport service, etc.
3) Sole Trader: Sole tradership is the easiest form of business organization to set up. A sole trader is an
individual trading alone under his or her own name, or under a trading name. The sole trader is fully
responsible for the running of the business. He or she is the only financial beneficiary of its success, but
he or she is also financially responsible for its failure.
4) Partnership: A partnership is defines as having between two and 20 owners. These owners have
unlimited liability. A contract that is called deed of agreement is usually drawn up to show how profits
and losses are shared.
5) Limited Companies: Companies in the private sector that wish to expand can go through the process
of incorporation. This allows the business organization to create its own legal identity. This means, by
law, that the owners of the business and the company are now separate. There are 2 types of limited
companies: Private Limited (LTD) & Public Limited (PLC).
In the UK. A limited company must be registered with the register of Companies and comply with he
Companies Act 2006, to have separate legal status.
Sole Trader
What is the meaning of the term “unlimited liability”?
The owner and the business are created the same in terms of the legal status of a sole trader. This is
called unlimited liability. If a sole trader is unable to meet its financial obligations and cannot pay bills, a
court has the authority to hand over the sole trader’s personal assets to any creditors to cover these
debts.
What are the advantages & disadvantages of Sole Tradership?
Advantages:
1) Business is easy to set up
2) Sole trader keeps all the profit
3) Sole trader has complete control
