Types of Business

Types of Business

Sole Trader

A sole trader, also known as a self-employed person, owns and runs their own business.
This type of business is simple to set up and provides the owner with a lot of control.
The owner is personally liable for the business’s debts, a concept known as unlimited liability.
Sole traders can employ staff but the business itself is owned and controlled by one individual.

Partnership

A partnership is a type of business owned and run by two or more people, normally up to a maximum of 20.
Partners share the decision-making, profits, and losses.
Just like sole traders, partners have unlimited liability for the business’s debts.
There is a high level of trust and cooperation needed between partners.

Private Limited Company (Ltd)

A private limited company (Ltd) is a privately held business entity.
Shareholders own the company and it is run by directors.
Shares in the company cannot be sold or traded on the public stock exchange.
Owners have limited liability, meaning they are only responsible for the company’s debts up to the amount they have invested.

Public Limited Company (Plc)

A public limited company (Plc) is similar to a private limited company but its shares can be bought and sold by the public on the stock exchange.
There are strict legal requirements to setting up a Plc including a minimum amount of issued shares.
This allows the company to raise significant capital but it is also exposed to more public scrutiny.

Social enterprises are businesses that have specific social objectives that serve its primary purpose.
Profits are mainly reinvested into the business to reach these social objectives.
Examples of social objectives include providing local employment opportunities or using profits to support local community projects.

Cooperative

A cooperative is a business that is owned and run by its members who have an equal say in what the business does.
They allocate profits in a way decided by the members.
This could be equally, according to use of the cooperative’s services, or another way defined by the members.