Forms of Business
Forms of Business
• The four main forms of business organisation are:
 Sole Trader
 Private Limited Company
 Co-operative
 Semi-State Company
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
 The sole trader has flexible trading hours
 The sole trader keeps all the profits
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
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
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.
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
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
 A written promise from the directors to be a director
and run the company properly
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
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
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
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
• These businesses provide goods and services for
consumers and examples include the ESBand Bord
Forms of Business
• Importance of state involvement in business are:
 Essential services will be available in all parts of the
 The country’s natural resources will always be
owned by the people
 The government may receive regular dividends
 They provide a lot of employment