Private enterprises
Sole proprietorship
1. Owner called sole proprietor
2. Owned by one individual
3. Provide all capital
4. Make all important business
decisions
5. bear all risk.Because of not
a legal entity and contracts
and agreements with others
are made in the name of
proprietor
6. Owner need to bear all
responsibility,debt and fines
of firm
7. Owner need to bear
unlimited liability the debt
interest. Not confined
amount of initial investment
8. Owner may have to use
personal property to settle
firm debt. The worst
situation is bankrupt
9. Owner die or bankrupt, firm
shut down. Unless owner
retires or sells the firm to
others. Then even the old
firm name be kept, the firm
is regarded as new firm.
10. Advantage: lack of lasting
continuity of the firm
hinders long term planning
and development
11. Simple to set up, only
acquire a business
registration certificate
12. Accounting information can
be secret, law isn’t required
owner disclose Accounting
informationto public
13. Limited source of capital,
Partnership
1. Owner called partners
2. more than one owners, no
upper limit of owners
3. Profit sharing ratio and
respective contribution of
capital have prior agreement
4. Sign on company so all
partners bear the risk
together
5. Not legal entity, based on
their roles, owners need to
bear the charges of firm
personally
6. Bear unlimited liability, all
partners need to repay the
firm debt by their personal
property
7. Limited continuity same as
sole proprietorship
8. Bear the decisions are made
by ant partners
9. The admission and
withdrawal of partners and
transfer of shares of
ownership need prior
agreement among all partners
10. Simple to set up, only
acquire a business
registration certificate
11. Limited sources of capital
but wider
Limited company
1. Owner called shareholders
2. Limited liability
3. Raise capital by issuing shares
and bonds
4. Legal entity, company can
have property and make
contracts and agreements so
limited company can be sued
or sue
5. Shareholders do not have to
bear company responsibility
6. The shareholders losses are
limited to the amount of
investment to the firm, the
personal assets of shareholders
are safeguarded
7. The.company is legal entity so
the continuity of company will
not be affected by
shareholders
8. Can raise capital by issuing
shares and bonds are
additional sources of capital
9. Separation of ownership and
management. Managed by
board of director(include
formulating major policies and
preparing budgets)
shareholders may not involve
in management directly
10. More complicated to set-up,
not only has to obtain a
Business Registration
Certificate from the Business
Registration Office of the
Inland Revenue Department,
but also has to register with
the Companies Registry
11. listed company must also
 only one owner provide fulfill strict requirements set
from owner’s loans and by Hong Kong Exchanges and
savings and firm’s retained Clearing Limited
profits Public Private
14. Prompt decisions making Limited Unlimited
because of the only owner shareholders shareholders
doesn’t need to get approval Can issue Cannot issue
from others shares and shares and
15. Because of lower profits tax bonds to bonds to
and bear unlimited liability public public
so owner have stronger
work incentive