Private Limited Companies CoOperatives State Owned Companies Franchises Forms of Ownership In this chapter we will look at Very Important The next slide is the most important slide in the topic and you must fill in and learn this off by heart ID: 464943
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Slide1
Sole TradersPrivate Limited CompaniesCo-OperativesState Owned CompaniesFranchises
Forms of Ownership
In this chapter we will look at:Slide2
Very Important*The next slide is the most important slide in the topic and you must fill in and learn this off by heart*Slide3
Sole Trader
Co-operatives
State
Body
Private
Limited Company
Set up
Ownership and control
Liability
Example
Formation Procedure
Profits
Advantages
DisadvantagesSlide4
Sole TradersThe Sole Trader owns and runs their own business. The Sole Trader is the one who makes all decisions and provides the money in their businessSlide5
Make A ListAre there sole traders in Johnstown or surrounding areas?Slide6
The following are the steps involved in setting up a Sole Trader BusinessDecide what type of business you want to go into- e.g. barbers/ pubFind a suitable
premises
Register your business
with the Register of Businesses- however if you want to use your own name you do not have to register and can begin trading immediately
Apply for a
licence
if you need one- e.g. for pubs/bookmakers/taxi driverSlide7
Sole TraderAdvantagesFull Control- Can make all decisions quicklyKeeps all the profit- Don’t have to share with anyone
Can open and close when you like
Easy and cheap to set up- a licence may/may not be needed
Disadvantages
UNLIMITED LIABILITY-CAN
LOSE YOUR OWN PROPERTY TO PAY DEBTS
The sole trader provides all finance to start the business
The owner makes all big decisions alone-can’t be an expert in everything
Hard to compete with larger businessesSlide8
Private Limited CompaniesFormed when between 2 and 100 people put together money to start a new business. The people who put money in are called shareholders.If the company makes a profit, shareholders receive a dividend
. The dividend received depends on the amount of shares you invest.
1 share = 1 vote
, the more shares, the more votes.
Shareholders have
L
imited
L
iability
, and the words
ltd
come after the company nameSlide9
Private Limited CompaniesAdvantagesLIMITED LIABILITY- ONLY LOSE WHAT YOU PUT INTO THE BUSINES
Can raise money by selling shares
When a shareholder dies the business keeps going
As the company expands it can employ more experts
Disadvantages
Profits are shared
More expensive to set up
Many Legal Requirements- Documents to fill in etc..
The original founders can lose control if bought outSlide10
Homework QuestionsWhat is a sole trader? Give an example. What is a Private Limited Company? Give an example.Compare Sole Traders and Private Limited Companies under the following headings: Set Up (How it is formed) Ownership and Control (Decision Making) Profits (How are they divided up)
Finance (Investment)
Risk (liability)
Size
ExampleSlide11
Co-OperativesCo-operatives pool resources to achieve common goals, which as individuals they may not achieve alone. The people who set it up are called members and all profits go to the membersCo-operatives have LIMITED LIABILITY which means…Each member has one vo
te regardless of the amount of shares they ownSlide12
Co-OperativesAdvantagesLIMITED LIABILITYAll members have an equal sayCreate EmploymentAchieve more collectively than individually
Disadvantages
Usually too small to compete with large companies
Less of an incentive to invest because one vote is one share
Managerial appointments sometimes based on popularity rather than abilitySlide13
State Owned CompaniesFormed by the Dáil and owned by the state with a board of directors appointed to run themWhen a government sells a State- Owned company it is called privatisationIf the government takes over a company it is called nationalisationSlide14
State Owned CompaniesSlide15
Advantages vs Employment. Provide Essential Services Profit-Income for State Keep control over natural resources.-Oil/Gas
Provides Essential Services
Profit
Control over Natural Resources
State Owned Companies
Disadvantages
May make a loss
Loans
May Make a loss
LoansSlide16
Franchising is a business arrangement whereby one person (franchiser) sells the right to use their name, idea or business to others (franchisees) and allows them to set up an exact replica of that business. A franchise is effectively a licence to produce and/or
sell another well- known company’s products
and use the company’s name.
The
franchiser trains and advises the franchises
in all aspects of running the business. He also lays down strict rules that all franchisees must obey. The product sold or produced must conform strictly to these conditions laid down by the company granting the licence.
What is FranchisingSlide17
Slide18
HomeworkComplete the next slide fully and study each topic carefully for class testSlide19
Sole Trader
Co-operatives
State
Body
Private
Limited Company
Set up
Ownership and control
Liability
Example
Formation Procedure
Profits
Advantages
DisadvantagesSlide20
Sole
Trader
Co-Operative
State
Body
Private
Limited Company
Ownership
Owned by one person
Owned /run by members
Owned by the government
Between
1-50
shareholders own
Control
One person has complete control and total responsibility
Each member has one vote (regardless of how many shares you own), to become a member you buy a share. It is managed by a committee
Minister responsible but appoints a board of directors to run on a daily basis.
Each share carry’s a vote, more shares more control.
Liability
Unlimited, therefore you can lose your personal assets if the company fails
Limited liability; therefore you only lose what you invested.
Tax payer suffers the burden of failure/loss
Limited liability and have the letters LTD after their name.
Examples
Retails/services (local butcher)
Credit
Union
CIE, FAS, RTE,ESB
Dunnes
Stores
Formation procedures
Easy to set up, few legal requirement, register for tax
8 people required, apply to register of friendly societies, a certificate of incorporation is issued and you must report annually to the register of friendly societies.
Formed by passing an Act in the
Oireachtas
Costly to set up, legal requirements; memorandum/articles of association, declaration of compliance, statement of capital.
Profits
Keeps all profits but suffers all losses
Divided among members
Re-invested or given to the government
Distributed in a form of dividend
A
dvantages
Keep profit, total control, personal relationship with customers,
Equal vote per member, limited liability, members committed to the co-op
Provides essential services, create employment
Limited liability, extra capital available, continuity of existence
Disadvantages
Unlimited liability, hard to expand, limited ideas, long hours
Lack of finance, no incentive to buy more shares, committee may lack expertise
Inefficient, loss making, monopoly
Difficult to set up, share not transferable to the general public.