1. Sole Traders
- Definition: A sole trader is a business owned and operated by one person.
- Characteristics:
- Easy to set up with minimal formalities.
- Owner has complete control and receives all profits.
- Unlimited liability, meaning the owner is personally responsible for all debts and obligations.
2. Partnerships
- Definition: A partnership is a business owned by two or more individuals who share profits and responsibilities.
- Characteristics:
- Simple to establish through a partnership agreement.
- Shared decision-making and profits.
- Unlimited liability for general partners, although there are variations like limited partnerships with limited liability for some partners.
3. Private Limited Companies (Ltd)
- Definition: A private limited company is a business entity owned by shareholders with limited liability, where shares are not publicly traded.
- Characteristics:
- Limited liability protects shareholders’ personal assets.
- Requires formal registration and compliance with corporate regulations.
- Shares can only be transferred privately with the approval of other shareholders.
4. Public Limited Companies (PLC)
- Definition: A public limited company is a business entity whose shares are traded publicly on a stock exchange.
- Characteristics:
- Limited liability for shareholders.
- Subject to strict regulatory requirements and transparency.
- Ability to raise large amounts of capital through public share offerings.
5. Franchises
- Definition: A franchise is a business model where a franchisee operates a business using the branding, systems, and support of a franchisor.
- Characteristics:
- Franchisee pays initial fees and ongoing royalties to the franchisor.
- Access to established brand, training, and support.
- Must adhere to the franchisor’s operational guidelines and standards.
6. Joint Ventures
- Definition: A joint venture is a business arrangement where two or more parties collaborate on a specific project or business activity, sharing resources, risks, and profits.
- Characteristics:
- Partners share expertise, technology, and resources.
- Typically formed for a specific purpose or project.
- Joint ventures can be temporary or long-term, depending on the agreement.
Each of these business structures has its own advantages and disadvantages, and the choice depends on factors such as the nature of the business, financial considerations, and the level of desired control and liability.
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