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The main types of business organisation in the UK are the Sole Trader, Partnership, Franchise, Private Limited Company and Public Limited Company.
In setting up a new business, you will make observations and projections about the market for your products and services, and take decisions about liability, taxation, expansion plans, ownership and the legal form of the business. Each business organisation and location are different and will need to observe different regulations.
Sole Trader, Partnership, Franchise, Private Limited Company and Public Limited Company business organisations in the UK are summarised below.
Before you make a final selection of your business type and start your business, you are strongly recommended to obtain professional advice from accountants and solicitors. |
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The
simplest form of business in
the UK is the Sole Trader. The
Sole Trader owns and runs the
business, uses their own personal
capital to get started and has
complete control of the business.
The Sole Trader has fewer legal
formalities and obligations associated
with other types of businesses.
Start up and running costs are
relatively lower.
One negative
feature may be the difficulty to
increase investment in the business;
as the Sole Trades capital is usually
limited, the business may not be
able to respond to the requirements
of expansion brought about by competition
and market demands. The personal
liability of the Sole trader is
unlimited for any losses of the
business.
Liability
is limited for the owners (Shareholders)
of Limited Companies. Other than
liability limitation, there may be
reasons why you may wish to choose
to set up a Limited Company. You
can find more information about private
limited companies in the About Private
Limited Companies section.
See Also:
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Ordinary
Partnership is similar to Sole Trader
except in partnership two or more self-employed
people share the decision-making, risks,
costs, and obligations of the business.
Each partner is personally responsible
for any debts of the business. Unlike
a limited company, if one of the partners
resigns dies or goes bankrupt, the
partnership must be dissolved.
There
is a Limited Liability type of
Partnership similar to an Ordinary
Partnership with the difference
of limitation of liability to the
amount of money the partners have
invested in or guaranteed for the
business. Another difference is
the requirement of registering
at Companies House.
Public
Limited Company is a type of limited
company whose shares may be offered
for sale to the public .
Franchising
is trading under the trade name
of a third party under a licence
granted by the third party. The
third party retains control over
the quality and standards of
the business and the way it is
run.
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