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Types of business organisation

Types of business organisations

Different forms of business organisation

Sole trader The owner ‘is’ the business – owns the assets and is liable for all the
debts.

No legal formalities are required to set up a sole trader business.

This form of business is inappropriate for large businesses or those
involving a degree of risk.

General Defined by Partnership Act 1890 as the relationship which subsists
partnership between persons carrying on a business in common with a view of
profit (see below).

Limited An artificial legal entity with ‘perpetual succession’. It can hold
liability property in its own right, enter into contracts in its own name, create
partnership floating charges, sue and be sued.

The liability of the members of a limited liability partnership (LLP) is
limited to the amount of capital they have agreed to contribute.
Requirements similar to that of a company (see Chapter 7.)

Limited Formed under the Limited Partnerships Act 1907 (see below).
partnership

Company A corporation is an artificial legal person (see Chapter 7.)

The rest of this chapter will focus on partnerships.

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