FORMS OF BUSINESS OWNERSHIP

1. FORMS OF BUSINESS OWNERSHIP

2. SOLE TRADER • IS A PERSON THAT OWNS AND RUNS THEIR OWN BUSINESS

3. CHARACTERISTICS OF A SOLE TRADER • ONE PERSON PROVIDES ALL THE MONEY(Capital) • ONE PERSON MAKES ALL THE DECISIONS • ONE PERSON KEEPS ALL THE PROFIT

4. Advantages of a Sole Trader • Easy to set up (no legal documents) • Keep all the profits • Make all the decisions • Personal contact with customers

5. Disadvantages of a Sole Trader • Unlimited liability ( if your business fails you could lose all your own personal wealth) • Suffer all losses yourself • Business ends when the owner dies

6. Private Limited Company (Ltd.) • A business that is owned by 2 to 50 people • Note: A single member company can have one owner

7. Characteristics of a Private Limited Co. • 2to 50 owners called shareholders. • Shares (part ownership) cannot be bought by the general public. • Shareholder’s receive a vote for every share they own • Must have Ltd. After it’s name. • Shareholders receive a share of the profits called a dividend.

8. Advantages of a Private Limited Co. • Limited liability - If the business fails you can only lose the money that you invested in the company. Your own personal wealth cannot be touched. • Business continues even when an owner dies. • Easier to raise finance as you have up to 50 shareholders.

9. Disadvantages of a Private Limited Co. • Legal Documents are needed to set up a co. • More costly to set up. • Decision making and profits are shared.

10. Co-operative • Is a business owned and run by members. • Each member has an equal say in the running of the business.

11. Characteristics of a Co-operative • Each member must buy at least one share. • Each member has only one vote. • Each member has an equal say in the running of the business.

12. Advantages of a co-op • Democratic as each member has an equal say.

13. Disadvantages of a co-op • For members who own a lot of shares they only get one vote. • Profits are shared in the form of dividends.

14. State Owned Business • Is a business which is set up, financed and controlled by the government. • Semi-state body • Statutory body

15. Characteristics of State Companies • A government minister is responsible for each state company. • They appoint a board of directors. • The government keeps the profits or re-invests it in the company.

16. Advantages of Semi-State Bodies/Companies • Ensure that essential services are provided to all people in the country. • Provide employment to a large no. of people. • Keep control of natural resources.

17. Disadvantages of Semi-State Bodies • Some are in a monopoly position which means that they have no competition and this can lead to in-effeciency and higher prices. • Some make losses which are covered by the tax payer.

18. Privatisation • When a Semi-State Body is sold to the gerneral public. Eg. Telecom Eireann sold to the public and is now known as Eircom. • A huge amount of money is received by the government. • The government no longer has control of the company.

19. Nationalisation • When a company that is important to the economy is making a loss. The government takes over in order to avoid massive job losses. • Eg. IFI

20. Recap of Key Terms • Sole Trader • Private Limited Co. • Limited Liability • Co-operative • Semi-state Body • Privatisation • Nationalisation