Edexcel Business A Level Revision

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...

Partnership -  (Unincorporated) where two or more people share the costs, risks and responsibilities or being in a business together. The partners between them own all of the businesses assets and owe all business liabilities, therefore have unlimited liability. The legal partnership agreement sets out how the partnership is run, covering areas such as; How profits are to be shared What the partners have to invest into the business How decisions are taken What happens if the partner dies or wishes to leave You can also have "sleeping partners" who invest, BUT do not manage the business. ADVANTAGES Business benefits from the expertise and efforts of more than one owner. Partners can provide specialist skills Greater potential to raise finance - partners each provide investment Risks, costs and responsibilities shared Financial records remain private DISADVANTAGES Full personal liability - "unlimited liability" A poor decision by one partner dam...

Sole traders - (Unincorporated) An individual owning the business on his/her own. Registered as self-employed and has unlimited liability. The sole trader owns all the businesses assets personally and is personally liable for the business debts. Therefore, their home and all of their assets may be used to pay off any debts that may incur and are unable to pay ADVANTAGES Quick and easy to set up (they can always be transferred to a limited company once launched) Simple to run - owner has complete control over decision making Minimal paperwork Easy to close/shut down All profits go to the shareholder Financial records remain private Motivation is high as the success of the individual and the business are one and the same DISADVANTAGES Full personal liability - "unlimited liability" Harder to raise finance - sole traders often have limited funds of their own and security against which to raise loans The business is the owner - the business suffers if the owner b...

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...