What are the types of Business entities?

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WHAT ARE THE TYPES OF BUSINESS ENTITIES?
There are four main types of business entity. They are sole traders, partnerships, private limited companies (LTD) and public limited companies (PLC). A sole trader is a business that is owned and controlled by one individual. Sole traders do not have a separate legal existence from their owners. And as a result, the owners are personally liable for all the business debts and in some cases may have to pay the debts out of their own pocket, known as unlimited liability. A partnership is the next step up from a sole trader. It is where two or more people own a business. A partnership is quite similar to a sole trader whereby the owners are equally and personally liable for the debts of a business. Partnerships share the responsibilities of the owners as well as profits and losses, it also allows more capital to be contributed by the owners than a sole trader. However, there is a high chance of dissatisfaction and disputes happening between the owners. A limited company is briefly an organisation which has separate legal identity to that of its owners or shareholders. Limited companies have limited liabilities meaning that if the business failed the maximum amount a shareholder could lose is their investments (i.e. shares) and their personal possession (i.e. assets) will not be used to pay off the company's debts. The next type is a private limited company (LTD). These businesses are usually family owned and the directors are often majority shareholders. They cannot offer shares to the public making it more harder to raise money and it is more difficult to takeover as an external party or investor. Also the financial information must be filed with the Registrar of Companies. Now, the final type is a public limited company. This is where a business is registered under the Companies Act and where two or more people are required to form the company assuming it has a lawful purpose. It can offer shares to the public on the stock exchange, which can mean the company has better access to capital and liquidity through selling shares. Although this is good financially, the company will be under greater public scrutiny on their actions and performance and the financial markets will control the value of the company through trading the shares.

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