Unit 1

Some of the benefits of a Limited Liability Company are that as a Limited Liability Company it limits the owner of personal liability for business actions. The members are liable, but normally just to the amount of their share in the business. Their individual assets are not considered for resolving business debts. The fact that your personal assets are protected is a great benefit. Whereas, operating under a partnership all members are individually accountable for the company’s debt. In comparing the differences between a

An advantage of being a public limited company is having limited liability because of only being responsible to amount invested into Tesco PLC. Another advantage of a public limited company is being able to liquidate. This is when shares are bought or sold to shareholders if on the stock exchange it’s quoted. An additional advantage of a public limited company is the share value as Tesco PLC’s value will be shown by the market capitalisation from being the share price being what it’s based on. An extra advantage of a public limited company is having better access to capital because of the existing and new investor are raising share capital.

Public limited company: a public limited company has to be registered before it starts trading. The owners of a public limited company are its shareholders; which are the people who have an interest in that specific business and decide to invest in it and start operating, and has part of the shares of the business. A public company has to start off as a private company and when it reaches a certain turnover, it can be turned into a public limited company. In order to be a shareholder in a business, you have to invest a minimum of £50.000, which is required. Each shareholder has a say in the business and they are able to share their ideas when they attend an AGM (Annual General Meeting) every year. The reports of the business are being presented during the meeting, where they discuss about different ideas of how to improve their ways of operating and how the business is doing. A public business is registered in the stock exchange and could be able to buy or sell shares, but it

Another business structure to establish is Limited Partnership, which is similar to the partnership with a slight difference where it formed with at least one general partner and one limited partner. The general partners have the same obligation as partners in a general partnership; however, limited partners have limited liability to the extent of their contribution. The advantage of this business formation is the limited personal liability for individual partners for the acts of another partner within the organization. It has the same tax consequences as a general partnership. One important positive aspect is management and control aspects of the organization could be divided or separated among partners. It’s shortcoming, a general partner is still personally fully liable for the debts of the business. If the limited partner wants to become active in the business, he/she may assume the personal liability obligation.

There are no outside investments or funding available to the investor. Liability factors play a major role in disadvantages too. This type of business has and unlimited liability, meaning if the business fails, the private properties are used to pay off the debt stemming from the business. These are some aspects to consider when contemplating this type of business.

Having discretionary time, more contacts, support and motivation is a big plus when starting a business. The right partnership has these qualities. When one needs time to spend with family and friends or even just to get the most important things dealing with the business done, having a partner is a good ideal because days or weeks can be rotated among the two. By bringing on a partner, you acquire a new network of contacts and potential customers. If one partner was to died or become physical impaired while in the partnership agreement the other partner can take over the business completely or choose to sell the other partner’s half of the business (Price, 2012). With sole proprietorship if the owner becomes impaired or dies the business can result in termination because there is no one to take over the business (LaMance, 2013)

Private companies are seperate legal entities and have a limited liability, they are made up of at least one to a maximum of 50 members. There is safety to members in regards to debts, you will only pay the amount equivalent to your share in the company.

Company has many advantages and disadvantages. One of the greatest advantages is limited liability whereby the shareholders only risk whatever amount they invested to the business and does not risk their personal possession in case if the business fails. Unlike sole proprietor and partnership are each liable for all the debts of the business (unlimited liability). For example, if the asset of the sole proprietor and partnership cannot settle the debt, the creditor can go after their personal asset (i.e house, bank account etc). On the other hand, the shareholder, investor or partner are not liable if the company runs out of funds.

The disadvantage is the owner of the business, are solely liable for any consequences of business failure or any other liability. For example, injuring a customer or damaging

Therefore, not everything are advantages. The main reason for this failures is the human factor. To stablish a relationship based in confidence and trust between partners requires an effort and time. Human resources integration and knowledge sharing are very difficult to manage. Different cultures and management styles can clash and grow barriers of communication and co-operation. When partners do not communicated their objectives to everyone involved clearly enough cause deterioration of the trust. There are some structural drawbacks like when the Joint Venture is not well balanced between partners: different levels of expertise, investments or assets brought into. At early stages, it is necessary that the Joint Venture receives support and leadership from the parent companies. Sometimes, this support is not given enough due to that the Joint Venture is not part of the core business of the parent

General partnership can be as simple as a written agreement between two people. General partnership require a small amount of red

Companies established under Sec.8 of the Companies Act of 2013 require the prior sanction of the Central Government. This section corresponds to Sec.25 of the Companies Act of 1956. The Central government, under a licence has the discretion to allow a company to drop the words ‘Limited’ from its name. Therefore the companies established under Sec. 8 of the Companies act of 2013 need not have the

Tax: taxation is also the one of the important factors as in PLC or proprietary limited Company the tax implication is the same as the other sole and partnership. which are pass through entities which means profit and losses are simply passed to the owners as it is while in corporations there is double taxtion as corporation has to pay a separate tax on its earning.

The main disadvantage of this is that the owner alone is responsible for all liabilities brought on by the business for which creditors can liquidate personal assets. In other words anything in the name of the business owner can be held as capital on losses incurred. Other disadvantages include the limited ability for the owner to secure financing and capital (limited to personal funds and loans) necessary for growth and

New business with more than single owner may consider being Limited Liability Company or general partnership. General partnership requires two or more people to agree to own and run a company for profit where management duties are shared among them including profits and loss. In contrast, a single member can own, manage and operate Limited Liability Company. A limited liability company with single owner can easily set up business strategies and guidelines without getting approval from anybody. General partnerships are not mandated to be registered with Registrar of companies. Partners are expected to disclose information to one another according to The Partnership act 1890 which applies to general partnership. Limited Liability Company is treated as a separate legal entity according to companies Act 1985. General partnership are formed when the partners begin business activities and not formed by state