Advantages And Disadvantages Of Different Business Structure


There are many types of organisational structure a business may decide to adopt. This assignment will examine the four main different business structures and present the advantages and disadvantages of each one. The business structures that I will be examining are as follows:
The partnership
The Private Limited Company (LTD)
The Public Limited Company (PLC)
Sole trader

A sole trader is an organisation, which is owned by one person. The assets and liabilities of the owner and those of the business are the same. There are no legal or tax distinctions between the owner and business.

This type of business is straightforward to set up and dissolve. It requires the minimal legal ...

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(or any other relative). However, the assets may be required to be returned by the court if it is satisfied that they were transferred to defeat creditors that were owed money.
There is no legal requirement to have the accounts and records audited. No public disclosure of accounts and records is necessary, unless the business is registered for Value Added Tax (VAT). There is no requirement to register for VAT unless the taxable supplies to customers is equal to, or exceeds, the registration level. The registration level is currently 50,000 for a twelve-month period).

The main disadvantage for being a sole trader is the unlimited liability factor. The sole trader is putting at risk his entire personal fortune including his house, car and any other personal assets in his possession that are outside the business. This is because there is no distinction between the individual (the owner) and the business. The law does not recognise the business as an artificial person (unlike a ...

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No public access to the accounts ensures confidentiality. Any business losses can be offset against other income. Can be converted to a limited company at a later stage. Benefits of self-employment for income tax and National Insurance. Can attract more capital by admitting new partners, however, each partner has the right to veto the introduction of the new partner. Can get credit easily because supplies are not at risk as it is the partners who are taking the risks. A partnership can sue (and be sued) in its own name even though it is not an artificial person. Can change s19 of the Partnership Act 1890, but all partners must agree (s24 of the Partnership Act 1890). Can change ...

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PAPER DETAILS
Added: 5/8/2006 01:25:00 PM
Category: Miscellaneous
Type: Premium Paper
Words: 1827
Pages: 7

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