Business Structures

This presentation explores the different types of business structures

commonly used by entrepreneurs. Understanding the characteristics and
implications of each structure is crucial for making informed decisions
about your business.
Sole Trader
A sole trader is a business owned and operated by one individual. The owner is responsible
for all aspects of the business, from decision-making to managing finances.

Simple Setup
Starting a sole trader business is often straightforward and requires minimal
paperwork.

Full Control
The sole trader has complete autonomy over all business decisions and operations.

Direct Profits
All profits generated by the business are retained by the sole trader.
Advantages of Sole Trader
Sole proprietorships offer several advantages, primarily related to flexibility and control over the business.

Simplicity Control Profit Retention

The setup process is straightforward The sole trader has complete All profits generated by the business
and often involves minimal legal decision-making authority over the belong to the sole trader.
requirements. business.
Disadvantages of Sole Trader

Despite their simplicity, sole trader businesses come with inherent risks and limitations.

1 Unlimited Liability
The owner is personally responsible for all business debts and liabilities.

2 Limited Resources
Sole traders often face challenges securing funding and may have limited
resources available.

3 Heavy Workload
The sole trader is responsible for all aspects of the business, potentially leading
to a heavy workload.
Partnership
A partnership involves two or more individuals who agree to share in the profits and
losses of a business.

1 Formation
Partners agree on terms of their partnership and establish a legal
agreement.

2 Shared Responsibilities
Partners share decision-making, workload, and responsibilities for the
business.

3 Shared Profits and Losses

Profits and losses are divided according to the terms outlined in the
partnership agreement.
Advantages of Partnership

Partnerships offer several benefits, particularly in terms of shared resources and

expertise.

Increased Resources Partners contribute their capital and

resources to the business.

Shared Workload Partners distribute responsibilities

and workload, reducing the burden
on each individual.

Diverse Skills Partners bring their unique skills

and expertise to the business.
Disadvantages of Partnership

While beneficial, partnerships also come with potential challenges and disadvantages.

Unlimited Liability
Each partner is personally liable for all business debts and obligations.

Potential for Disputes

Differences in opinions and perspectives can lead to conflicts and
disagreements between partners.

Shared Profits
Profits are divided among partners, potentially leading to unequal
distributions.
Private Limited Company (Ltd)
A private limited company is a separate legal entity owned by a limited number of shareholders.

Limited Liability Private Ownership Regulatory Requirements

Shareholders are only liable for the Shares are not publicly traded and are
amount of their investment, protecting typically held by a small group of Private limited companies are subject to
their personal assets. investors. more stringent legal and regulatory
requirements.
Public Limited Company (PLC)
Public limited companies are larger entities whose shares are traded publicly on stock exchanges, allowing the general public to invest
in the company.

Public Ownership Capital Raising

Shares are freely traded on a stock exchange, making the PLCs can raise significant capital by issuing shares to the
company accessible to a wide range of investors. public, enabling expansion and growth.
Choosing the Right Business
Structure
The choice of business structure significantly impacts the legal, financial, and
operational aspects of a company.

1 Consider Your Needs

Evaluate your specific business requirements, including liability, control, and
funding needs.

2 Seek Professional Advice

Consult with legal and financial experts to determine the most suitable structure
for your business.

3 Long-Term Planning
Choose a structure that aligns with your business goals and anticipates future
growth and expansion.