Ownership Options

Sole Trader

A sole trader is a business set up, owned, and run by one person, such as farmers or chemists.

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Advantages of being a Sole Trader:

• Easy Setup: Minimal legal requirements and no need for government permission.
• Profit Retention: The owner keeps all the profits.
• Confidentiality: Financial accounts are not published.
• Decision-Making: Quick and easy decisions, as only one person is involved.

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Disadvantages of being a Sole Trader:

• Unlimited Liability: The owner is personally liable for business debts.
• Stress: The burden of all work falls on one person.
• Capital Raising: Difficult to obtain loans, leading to a higher bankruptcy risk.
• Lack of Continuity: The business doesn't survive if the owner stops.

Partnership

A partnership is a business owned and run by 2 to 20 owners, combining resources and talents for success. This structure is commonly used by Accountancy firms.

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Advantages of being a Partnership:

• Easy Setup: Quick setup with minimal legal requirements (requires a Deed of Partnership).
• Increased Resources: More money and skills available.
• Shared Expertise: Different skills lead to better decision-making.
• Confidentiality: Financial accounts are not required to be published.

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Disdvantages of being a Partnership

• Unlimited Liability: Partners are jointly liable for debts.
• Slower Decision-Making: More people need to be consulted.
• Profit Sharing: Profits must be divided according to an agreed ratio.
• Disputes: Potential for disagreements among partners.
• Lack of Continuity: The business may not survive if a partner leaves.

Private Limited Company

A private limited company is a business set up by 1 to 149 people (shareholders). It is a separate legal entity, like Zara or Eason and Son Ltd.

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Advantages of being a plc:

• Limited Liability: Shareholders risk only their invested money.
• Capital Raising: Easier to attract investment from shareholders.
• Workload Distribution: Tasks are divided among directors, enhancing decision-making.
• Tax Benefits: Lower corporate tax rates than other business types.
• Continuity: The business continues to exist even if ownership changes.

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Disadvantages of being a plc:

• Complex Setup: Requires legal procedures and incorporation.
• Public Accounts: Financial accounts must be published.
• Decision-Making: More complex due to more people involved.
• Legal Compliance: Must adhere to regulations and reporting standards.