Business
organisations
BUSINESS
Types of business organisations
• SOLE TRADER
• PARTNERSHIP
• LIMITED COMPANY
SOLE TRADER
A business owned and operated by a
single person who invests and is
personally responsible for any debts.
ADVANTAGES of a sole trader
1. Simple and easy to make.
2. Can keep all the profit
3. Start up costs are low.
4. Easy decision making.
5. Can easily adapt to the market.
6. Good customer relation.
7. Complete secrecy
8. Flexibility in operation
DISADVANTAGES of sole trader
1. Unlimited liability
2. Capacity to raise capital is limited
3. May lead to innefective decision making.
4. Losses cannot be shared
5. Cannot benefit from economies of scale
PARTNERSHIP
A partnership is a formal arrangement
by two or more parties to manage and
operate a business and share its profits
ADVANTAGES of a partnership
1. Easy to form.
2. Parners share capital.
3. Better decision making
4. Sharing risk
5. Flexibility in operation
6. Spread workload
DISADVANTAGES of parnership
1. Limited to 20 members
2. More people to share profit
3. Disagreement may occur
4. General partners have unlimited liabilities
LIMITED COMPANY
A type of business where the company
has a legal identity of its own seperate
from its owners
ADVANTAGES of a limited company
1. Complete control