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Forms of Business
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Forms of Business
• The four main forms of business organisation are:
 Sole Trader
 Private Limited Company
 Co-operative
 Semi-State Company
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Forms of Business
• The Sole Trader is a person who owns and runs his
or her own business
• Advantages of being a sole trader
 A sole trader business is easy to form
 A sole trader has lower costs
 Decisions can be made
quickly
 The sole trader has flexible trading hours
 The sole trader keeps all the profits
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Forms of Business
• Disadvantages of being a sole trader
 A sole trader has unlimited liability
 The sole trader must provide all the capital
 The sole trader is
responsible for all parts of
the business
 Prices are higher than in
other forms of business
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Forms of Business
• A private limited company is formed when
between 1 and 50 people join together to set up a
business with limited liability
 The people who put money into the new business
are called shareholders
 The total amount invested in the business is called
the capital
 The company name is followed by the letters Ltd
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Forms of Business
• Limited Liability means that if a private limited
company goes bankrupt, i.e. has debts which they
are unable to pay back, the shareholders will only
lose the amount they have invested in the company.
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Forms of Business
Advantages of a Private Limited Company
 The business owners have limited liability
 It is easy to raise money to expand the business
 Decisions making can be shared
 It is possible to attract the best managers and
employees
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Forms of Business
• A number of documents are required when
setting up a limited company.
1. Form A1 which contains:
 The name and registered address
 The names, addresses and occupations of the
directors
 A written promise from the directors to be a director
and run the company properly
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Forms of Business
Documents required setting up a limited company
2. Memorandum of Association which contains:
 The name of the business
 The objectives of the business i.e. what it was set
up to do
 The amount of capital invested in the business
 The names of the directors of the new business
 A statement that the business has limited liability
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Forms of Business
Documents required setting up a limited company
3. Articles of Association which contains:
 The name of the business
 The amount of share capital in the business
 The number of directors in the company and how
they are elected
 The procedure for calling company meetings
 The voting rights for each type of share in the
business
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Forms of Business
The Co-operative
• Co-operatives are organisations formed by people
who join together to achieve a particular objective
which they could not achieve on their own.
• There are various types of co-operative:
 Producer Co-operative
 Retail Co-operative
 Worker Co-operative
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Forms of Business
State Ownership
• State Ownership refers to companies and
organisations owned by the State (Government) and
known as semi-state companies or state-sponsored
bodies.
• These businesses provide goods and services for
consumers and examples include the ESBand Bord
Gais.
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Forms of Business
• Importance of state involvement in business are:
 Essential services will be available in all parts of the
country
 The country’s natural resources will always be
owned by the people
 The government may receive regular dividends
 They provide a lot of employment
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FormsOfBusiness - ST.DOMINICS COLLEGE