Edexcel Business A Level Revision

Private limited company - (Incorporated) A business that is owned by its shareholders known to the company, often family and friends, run by directors and where the liability of shareholders for the debts of the company is limited. Shares cannot be sold openly on the stock exchange, only to other shareholders, or people known to the business. This means that shares are often sold at a discount to the real value of the shares because the shareholders are "locked in" and either sell at the price that they are offered, or do not sell at all. ADVANTAGES Limited liability Separate legal identity More flexible than a Plc Financial records remain relatively private More capital can be raised through the sale of shares DISADVANTAGES More complex to set up due to increased legal requirements Some loss of control as shareholders have voting rights Unable to sell shares to the public

Public limited company - (INCORPORATED) A public limited company ('PLC') is a company that is able to offer its shares to the public . They don't have to offer those shares to the public, but they can. When shares are publicly traded on the public stock market, Plc companies have substantially more shareholders. Public companies are subject to significantly greater regulation in terms of public disclosure of financial records and other information ADVANTAGES Have limited liability Can easily raise capital by selling shares on the stock exchange, more people to buy them. The increased capital allows company to grow and diversify. The status of company increased, banks more willing to lend. DISADVANTAGES The shareholders own company but directors control it, ‘divorce of ownership and control’ – the directors may make decisions that don’t directly benefit the shareholders, this can create disagreements. There is always threat that someone will buy enough shares...

Unincorporated - A business that does not possess a separate legal identity from its owner(s). The owner(s) bear full liability for any action or inaction of the business : they may sue and be sued for business activity or inactivity. The owner is the business. Most unincorporated businesses operate as sole traders. Incorporated - means owners have their own legal identity and have limited liability. Most incorporated businesses operate as Ltd. Unlimited Liability - business owners are personally liable for all business debts if the business can't pay its liabilities . Only unincorporated businesses have unlimited liability. If the unincorporated business fails, the owners are liable for the amounts owed.   Limited Liability - the condition by which shareholders are not liable for any debts owed by the company. They only lose the money that they have invested in the business in the form of shares. Can own things itself (assets), can sue and be sued. Companies are owned ...

Liability - is a company's financial debt or obligations that arise during the course of its business Limited liability - An investor's liability/financial commitment is limited to the total amount invested or promised in share capital. An investor's personal belongings beyond this venture are protected. Unlimited liability - The owners of a business are responsible for the total amount of debt of the business. The owner may lose their personal belongings, e.g. home and cars, if the value of these is needed to cover the debts of the business. UNLIMITED LIABILITY IS SEEN AS A HIGH RISK Incorporated - An incorporated business (also called a corporation) is a type of business that offers many benefits over being a sole proprietor or partnership, including liability protection and additional tax deductions. Forming a corporation also allows you raise capital through sale of shares of your company . Creditors - is owed money, either by a business or an individual f...