The first thing a business owner has to do is find out how the business will be structured, such as: The level of control they want to have over the business . The size of the business they are going to attain . The level of structure they will be dealing with .How vulnerable the business is to lawsuits .Tax implications of the different ownership structures. Expected profit of the business Whether they will re-invest earnings into the business . If they will need to access cash out of the business for themselves
Law affects business and employers are affected by employment laws. There are different types of legal forms of ownerships for small businesses. Private sector: includes all the businesses that are set up by individuals or groups of individuals. In the private sector there are different types of businesses, some are small retails with a single owner. Others are big international companies such as Coca Cola. All businesses are different and vary depending on the kind of ownership and legal form they undertake.
Unincorporated businesses are businesses that have no legal differences between the owners and the businesses. Everything that is done within the business is in the name of the owner or owners and these firms are usually relatively small and are either owned by one person or a few partners. In corporate businesses, the business has a separate legal identity from the owner. In which case the business can be sued, taken over and sometimes even liquidated.
The different types of legal forms of ownerships are: Sole trader. Partnership . Private limited company .Public limited company. Franchise When deciding the type of ownership I want for my business I need to take into consideration the advantages and disadvantages for each form of ownership. Sole trader The most common type of enterprise would be a sole trader as it is the easiest and least costly way of starting a business and also it is the most common form of a private sector. There are likely to be fees to obtain the business name registration and other necessary licenses.
Another form of ownership would be partnership. A partnership business can be owned by 2-20 people. There are several types of ownership. The two most common types are general and limited partnerships. A general partnership can be form simply by an oral agreement between two or more people, but a legal partnership agreement drawn up by attorney is highly recommended. However legal fees for having a partnership agreement are higher than being a sole trader. A partnership has no legal formalities but partners need to draw up a deed which states partner's rights if a dispute ever occurred.
It covers problems such as how much capital each partner will put in, the procedure of ending the partnership and the rules for taking on other partners. There are other forms of business that are less risky than sole traders and partnerships. These are private limited companies and public limited companies. Private shareholders usually own private limited companies, which would be friends or family. People choose to have this type of ownership as each shareholder has limited liability, can raise extra capital; profits have to be shared between people, financial information publicly available.
You need certain legal requirements to set up and run the company such as memorandum of association, articles of association and have to hold AGMs. There are two types of limited company, private limited and public limited. Private Limited companies are somewhat smaller than public limited companies and tend to end their name with Ltd or private limited companies. All the share holders need to agree on all the transfers beforehand and all the shares are transferred privately. Ltd businesses are primarily family run and the firm directors are the share holders who are concerned in successively running the business.