Privately Owned Businesses
Privately Owned Businesses are owned by private individuals (One or more). Privately owned businesses are: Sole Trader Sole Traders are owned by own person. They are small simple businesses. A sole trader is an unlimited company as single owner has full responsibility. An example of a sole trader would be trades people or independent shops. Being a sole trader, it is easy to set up. The single owner will have full control as he/she is independent, who can decide their work hours, making it flexible.
They can make quick personal decisions and can be put into effect rapidly. Having full control they have minimum paperwork. Being a single owner they would have to find their sources of finance personally making it more difficult. They would have to consider loans, grants, and owner’s capital or saved profit. Disadvantages of being a sole trader would be long working hours and few holidays, which they would loose money if they took a holiday as they wouldn’t be selling their product or service. If the owner was Ill or sick it could cause closure and money loss.
The Business would be at risk if the owner injured themselves or passed away. They are unlimited liability, which means if the owner went into debt, he/she is at risk to loosing their personal belongings. Any profit the business makes can be invested back into the business, ‘Profit Retention’. The other option is that the money can be personally kept by the single owner. Partnership Partnerships are owned jointly by two or more people. Usually between 2-20 people. An example of a partnership would be accountants, doctors, dentists, vets, solicitors.
Being a Partnership there is more than one person to make a decision, and problems can be shared. Partners can share skills, letting them specialise in different areas and sharing skills. Raising capital is hard when you’re a sole trader, but when being a partnership, it makes it a lot easier as others can contribute. Profit made by the business can either be invested back into the business if all the partners agree. Or they can split it between them and personally keep it. In a partnership the control can vary.
They could either split the decision and all agree or they could each specialise in different areas, and control their part. Disadvantages in being a partnership can be the partners may disagree, causing conflicts. Others could work harder than others making it unfair. Profits would equally have to be shared. No decisions can be final unless all partners fully agree. Actions/Mistakes made by one partner will have effect on all. Partnerships are also unlimited liability, which means if they were in debt, they can all loose personal belongings.