Types of Private O wnership
Dec 25, 2015
Types of Private Ownership
Types of Private Ownership
An Overview :
Target audience - S.4 Economics Students
Uses of the program - lecturing assistance
Approximate length - ONE lesson
Supplements - textbook, notes
IntroductionThrere are THREE common forms of private enterprises. They are :
Sole Proprietorship
Partnership
Limited Company
Sole Proprietorship
Meaning
Features
Advantages
Disadvantages
Sole Proprietorship
Meaning
It is a firm with only ONE owner
Sole Proprietorship
Features
1. No separate legal status
2. Unlimited liability
3. Lack of continuity
4. Freedom of transfer of business
5. Simple to set up
Sole Proprietorship
Advantages
1. Strong incentive
2. Prompt decision making
3. Close relationship with employees
4. Close contact with customers
5. Simple to set up
6. Lower profit tax rate in H.K.
Sole Proprietorship
Disadvantages
1. Unlimited liabilities
2. Limited capital for expansion
3. Excessive responsibility
4. Lack of continuity
Partnership
Meaning
Features
Advantages
Disadvantages
Types
Partnership
Meaning
A relationship between personscarrying on a business for profit.
Partnership
Types
1. General Partnership
2. Limited Partnership
Their main differences are some partners in limited partnership are “limited partners”. They enjoy limitedliabilities.
Partnership
Features
1. Limit of 2 -20 partners
2. No separate legal identity
3. Unlimited liabilities
4. Act by one binds all others
5. Regulations on admission/withdrawal of partners
6. Lack of continuity
Partnership
Advantages
1. Wider sources of capital
2. Wider scope of specialization
3. Cost and risk sharing
4. Simple to set up
5. Lower profit tax rate in H.K.
Partnership
Disadvantages
1. One partners errs, all partners suffer
2. Possible delay in making decision
3. Inflexible organization
4. Lack of continuity
Limited Company
Types
Features
Advantages
Disadvantages
Limited Company
Types
1. Private limited company
2. Public limited company
Let’s see their difference !
Private Vs Public Limited Company
Private Public
No. of shareholder
Transfer of shares
Public trading of shares
Disclosure of accounts
2 -20 2 -
Not freely Freely
Not allowed Allowed
Not to public To public
Limited CompanyFeatures
1. Owners are shareholders
2. Independent legal identity
3. Limited liability
4. Lasting continuity
5. Possible separation of ownership & management
Limited CompanyAdvantages
1. Limited liability
2. Widest source of capital
3. Lasting continuity
4. Higher efficiency in management
5. Shares easily transferable
Limited CompanyDisadvantages
1. Longer time in making decision
2. More costly to maintain morale
3. Lower incentive
4. More complicated to set up
5. Higher profit tax rate in H.K.
THE END