Business Organization

Types of Business
Organization
Olena Kovalchuk
oleno@ukr.net Doctor of Pedagogical
Sciences
WHAT IS A BUSINESS ORGANISATION?
 The term "business organization" refers to
how a business is structured.
 It refers to a commercial or industrial
enterprise and the people who constitute it.
Private Sector
SOLE PROPRIETORSHIP
 Easiest and least expensive form of ownership to
organize (take up 90% of all businesses )
 The owner must register with and send annual accounts
to the government Tax Office.
 They must register their business names with
the Registrar of Business Names.
 They must obey all basic laws for trading and commerce.
 is owned and run by one person only (even though some
people are empolyed).
 fully responsible for all debts and obligations related to
his or her business. A creditor with a claim against all of
his or her assets, whether business or personal (unlimited
liability)
Advantages
 The owner is his own boss, and has total control over
the business.
 The owner gets 100% of profits.
 Motivation because he gets all the profits.
 The owner has freedom to change working hours or
whom to employ, etc.
 He has personal contact with customers.
 He does not have to share information with anyone but
the tax office, thus he enjoys complete secrecy.
Disadvantages
 Nobody to discuss problems with.
 Unlimited liability.
 Limited finance/capital, business will remain small.
 The owner normally spends long hours working.
 Some parts of the business can be inefficient because
of lack of specialists.
 Does not benefit from economies of scale.
 No continuity, no legal identity.
Sole proprietorship is recommended
for people who:
 Are setting up a new business.
 Do not require a lot of capital for their business.
 Require direct contact for customer service.
PARTNERSHIP
 A partnership is a group consisting of 2 to 20
people who run and own a business together.
They require a Deed of
Partnership or Partnership Agreement,
which is a document that states that all
partners agree to work with each other, and
issues such as who put the most capital into
the business or who is entitled to the most
profit. Other legal regulations are similar to
that of a sole trader.
Advantages
 More capital than a sole trader.
 Responsibilities are split.
 Any losses are shared between partners.
Disadvantages
 Unlimited liability.
 No continuity, no legal identity.
 Partners can disagree on decisions, slowing
down decision making.
 If one partner is inefficient or dishonest,
everybody loses.
 Limited capital, there is a limit of 20 people
for any partnership.
Recommended to people who:
 Want to make a bigger business but does not want legal
complications.
 Professionals, such as doctors or lawyers, cannot form a
company, and can only form a partnership.
 Family, when they want a simple means of getting everybody
into a business (Warning: Nepotism is usually not
recommended).
 In some countries including the UK there

can be Limited Partnerships. This business has
limited liability but shares cannot be bought
or sold. It is abbreviated as LLP.
Types of Partnerships:
 1. General Partnership
Partners divide responsibility for management and
liability, as well as the shares of profit or loss according
to their internal agreement. Equal shares are assumed
unless there is a written agreement that states
differently.
 2. Limited Partnership and Partnership with limited
liability
"Limited" means that most of the partners have limited
liability (to the extent of their investment) as well as
limited management decisions, which generally
encourages investors for short term projects, or for
investing in capital assets. This form of ownership is not
often used for operating retail or service businesses.
Forming a limited partnership is more complex and
formal than that of a general partnership.
3. Joint venture
 acts like a general partnership, but it is formed
for a limited period of time or a single project. If
the partners in a joint venture repeat the
activity, they will be recognized as a continuing
partnership and distribute accumulated
partnership assets upon dissolution of the entity.
Pros:
 Shared costs are good for tackling expensive
projects. (e.g aircraft)
 Pooled knowledge. (e.g foreign and local
business)Risks are shared.
Cons:
 Profits have to be shared.
 Disagreements might occur. The two partners
might run the joint venture differently.
Companies
 Private Limited Company
 Public Limited Company

Public Sector
Thank you for your attention!
olenok@ukr.net

Business Organization

Uploaded by

Copyright:

Available Formats

Business Organization

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Business Organization

Uploaded by

Copyright:

Available Formats

Types of Business

 In some countries including the UK there

 Private Limited Company

 Public Limited Company

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.