Lecture 2 - Business Organisations Flashcards
Considerations when forming a business
Cost - setup and ongoing
Risk - e.g. personal liability
Structure
Sole Trader
Unlimited liability
Complete privacy
No Companies House registration requirements
Not a separate legal entity
Need to register as self-employed for HMRC
Partnership (General)
No limited liability
Not separate legal entity
No obligation to register financial liability
Complete privacy.
Limited partnerships
Governed by LPA 1907
Registered at Companies House (but no account filing requirements)
Limited partners plus at least one general (unlimited) partner
LLP
Governed by LLPA 2000
Hybrid company and partnership
Separate legal personality
Registered at Companies House
At least 2 members named as responsible for filings at Companies House
Must file annual accounts
Liability of members is limited to the amount they have agreed to contribute to the debts of LLP
Companies - key concepts
Limited liability - encourages investment/risk taking and protects shareholders - shifts risk to creditors.
Separate legal personality - owns its own property and profit.
Private company (Ltd)
No minimum share capital requirements.
Prohibited from offering shares to the public.
Can be formed by one person.
Public company (plc)
Minimum share capital of £50,000.
Can offer shares to the public.
Shares must be transferable.
Requires trading certificate before it can trade.
Private company limited by guarantee
Liability of members is limited by what they agreed to pay in the event of winding up.
No share capital
Membership is non-transferable.
Listed company
26% of public companies
Admitted onto a Regulated Investment Exchange (REI)
