Disadvantages Of Private Limited Business

1022 Words5 Pages
• Sole Trader A sole trader is a business which is owned by just one person. There are more sole traders in the UK than any other type of business. The advantages of sole traders are: easy to set up a business, has complete control over the business, able to keep all the profits as there are no partners, personal service in terms of getting to know the customer & ensuring that their needs are met, privacy since the businesses financial information doesn’t need to be published (except to the inland revenue for tax purposes) However there are disadvantages such as: unlimited liability, shortage of finance since the owner is the only source of capital & this may prevent expansion, pressure of responsibility, lack of expertise in running the business…show more content…
It’s suitable for new business startups or for an existing sole trader or partnership seeking benefits of limited liability. The shares cannot be advertised or floated on the stock market & this is why it’s known as private limited companies as the transfer of shares should be done privately with the agreement of the shareholders. Advantages of private limited companies are: limited liability, sources of finance due the security of limited liability so it’s easier to attract investors, the continuity will be guaranteed even if something happens to the owner as it’s a separate legal identity. However the disadvantages are: legal requirements so it takes time & money, loss of privacy & limited growth due to the restriction of share capital to a maximum of 50,000 pounds, & the inability to sell the shares to the public which limits growth due to the lack of…show more content…
The most important aspect of a cooperative is that the members have close association with the cooperative as producers or consumers of products or services or as its employees. Cooperatives are based on self help, self responsibility, democracy & equality. Cooperative members believe in the ethical values of honesty, openness, social responsibility, & caring for others. Most cooperatives are governed on a strict “one member, one vote” basis to maintain the control in an organization. Economic benefits are given according to each member’s level of economic interest in the cooperative for example a dividend on sales or purchase. Cooperatives are generally classified as producer or consumer cooperatives & they are also classified based on their function. Classification is largely based on the mutual interest that the members shares. E.g. Asda &

More about Disadvantages Of Private Limited Business

Open Document