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GCSE APPLIED BUSINESS

GCSE APPLIED BUSINESS. Limited Companies. Limited Liability Companies. There are two types of limited company – private limited company and public limited company. Both types of company have the following main differences from a sole trader or a partnership:. DIFFERENCES.

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GCSE APPLIED BUSINESS

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  1. GCSE APPLIED BUSINESS Limited Companies

  2. Limited Liability Companies • There are two types of limited company – private limited company and public limited company. Both types of company have the following main differences from a sole trader or a partnership:

  3. DIFFERENCES • A limited company is owned by shareholders who have bought shares in the company. A company is run by the Directors who are paid employees. In smaller companies, the shareholders may also be the Directors, but in larger companies the shareholders may have nothing to do with the running of the business. They buy shares in return for a dividend (a share of the profits).

  4. ADVANTAGES OF LIMITED COMPANY • Owners (shareholders) have limited liability – shareholders can only lose the money they have paid for the shares if the business goes bankrupt. • Unlike a sole trader or partnership, a company can continue trading after the death of the owners, because it has been incorporated.

  5. DISADVANTAGES OF LIMITED COMPANY • More difficult to set up than a sole trader or partnership. • Has to be registered with the Company Registration Office at Companies House, Cardiff • It must have a Memorandum of Association and Articles of Association • Accounts must be sent to the Company Registration Office each year, where anyone can inspect them

  6. PRIVATE LIMITED COMPANY • Shares in a ‘private’ limited company can only be sold privately – cannot be offered to the general public • Often shareholders are members of the same family • Private Limited companies have ‘Ltd’ after their names

  7. PUBLIC LIMITED COMPANY • The public can buy shares in the company • Being a plc means the company is able to grow • If a company does well, the shares become more valuable. Similarly, if the company trades poorly, the shares reduce in value

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