FORMS OF BUSINESS OWNERSHIP

SOLE TRADER IS A PERSON

THAT OWNS AND RUNS THEIR OWN BUSINESS

CHARACTERISTICS OF A SOLE TRADER

ONE PERSON PROVIDES ALL THE MONEY(Capital)

ONE PERSON MAKES ALL THE DECISIONS

ONE PERSON KEEPS ALL THE PROFIT

Advantages of a Sole Trader Easy to set up (no legal documents)

Keep all the profits

Make all the decisions

Personal contact with customers

Disadvantages of a Sole Trader Unlimited liability ( if your business

fails you could lose all your own personal wealth)

Suffer all losses yourself

Business ends when the owner dies

Private Limited Company (Ltd.)

A business that is owned by 2 to 50 people

Note: A single member company can have one owner

Characteristics of a Private Limited Co. 2 to 50 owners called shareholders.

Shares (part ownership) cannot be bought by the general public.

Shareholder’s receive a vote for every share they own

Must have Ltd. After it’s name.

Shareholders receive a share of the profits called a dividend.

Advantages of a Private Limited Co. Limited liability - If the business fails

you can only lose the money that you invested in the company. Your own personal wealth cannot be touched.

Business continues even when an owner dies.

Easier to raise finance as you have up to 50 shareholders.

Disadvantages of a Private Limited Co. Legal Documents are needed to

set up a co.

More costly to set up.

Decision making and profits are shared.

Co-operative Is a business

owned and run by members.

Each member has an equal say in the running of the business.

Characteristics of a Co-operative

Each member must buy at least one share.

Each member has only one vote.

Each member has an equal say in the running of the business.

Advantages of a co-op Democratic as each member has

an equal say.

Disadvantages of a co-op For members who own a lot of

shares they only get one vote.

Profits are shared in the form of dividends.

State Owned Business Is a business

which is set up, financed and controlled by the government.

Semi-state body Statutory body

Characteristics of State Companies A government minister is

responsible for each state company.

They appoint a board of directors.

The government keeps the profits or re-invests it in the company.

Advantages of Semi-State Bodies/Companies Ensure that essential services are

provided to all people in the country.

Provide employment to a large no. of people.

Keep control of natural resources.

Disadvantages of Semi-State Bodies Some are in a monopoly position

which means that they have no competition and this can lead to in-effeciency and higher prices.

Some make losses which are covered by the tax payer.

Privatisation When a Semi-State Body is sold to the

gerneral public. Eg. Telecom Eireann sold to the public and is now known as Eircom.

A huge amount of money is received by the government.

The government no longer has control of the company.

Nationalisation When a company that is important

to the economy is making a loss. The government takes over in order to avoid massive job losses.

Eg. IFI

Recap of Key Terms Sole Trader Private Limited Co. Limited Liability Co-operative Semi-state Body Privatisation Nationalisation