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Ownership Structures Available to Start-Up Businesses- JigSaw

SOLE TRADER

Formation

PARTNERSHIP

Easy to set up
No need to register
own name
May need license
(pub, etc.)

Easy to set up
Usually involves a deed
of partnership

PRIVATE LIMITED
COMPANY (LTD)

Ownership

1 owner

Owners Liability

Unlimited liability

Dissolution

Dissolution on
retirement/death of
owner

2 or more partners (max


20)
Unlimited liability but
partners are jointly
responsible and severally
liable for business debts
Dissolution on
retirement/death of
owner/on agreement

Management and
Decision Making

Finance

Owner has
complete control
and makes all
decisions
High level of
responsibility
Lack of capital
Reliance on
savings and small
loans

Shared decision making


Extra skills and expertise

More capital
Less risk

CO-OPERATIVE

Up to 99 shareholders
Form A1 required
Memorandum of
Association
Articles of Association
Must register with
CRO who issue
Certificate of
Incorporation
Shareholders (2-50)
1 share= 1 vote
Limited liability
(Company has
separate legal entity to
its owners)
Dissolution by
agreement, bankruptcy
or court order
Company continues
even if shareholders
change
Board of Directors
manage company
CEO and managers
coordinate day to day
activities

Minimum of 7 members
Register with Registrar of
Friendly Societies

Shareholders (Min 7)
1 share= 1 vote
Limited liability

Dissolution by agreement,
bankruptcy or court order
Co-op continues even if
shareholders change

Board elected by
shareholders but members
may work in the Co-op

Additional capital
available by issuing
new shares or the
transfer of existing
shares

Financed by grants, shares


and loans

Distribution of
Profits

All profits to owner

Profits shared by partners

Easier to borrow
Profits shared in the
form of a dividend

Profit shared amongst


members (dividends)

Group Work Worksheet


Read the information provided above for each of the four business organisation structures available to start-up businesses. Interpret this
information in order to establish the advantages and disadvantages of each business organisation structure below.
Type of Business Organisation

Sole Trader
Definition:

Partnership
Definition:

Private Limited Company (Ltd)


Definition:

Advantages

Disadvantages

Co-Operative
Definition:

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