• Sole Traders

• Private Limited Companies

• Co-Operatives

• State Owned Companies

• Franchises

Forms of OwnershipIn 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*

Sole Trader Co-operatives State Body Private Limited Company

Set up

Ownership and control

Liability

Example

Formation Procedure

Profits

Advantages

Disadvantages

Sole Traders

• The Sole Trader owns and runs their own business. The Sole Trader is the one who makes all decisions and provides the money in their business

Make A List

• Are there sole traders in Johnstown or surrounding areas?

The following are the steps involved in setting up a Sole

Trader Business1. Decide what type of business you want to go into- e.g.

barbers/ pub2. Find a suitable premises3. 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

4. Apply for a licence if you need one- e.g. for pubs/bookmakers/taxi driver

Sole Trader

Advantages

• Full Control- Can make all decisions quickly• Keeps 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

businesses

Private Limited Companies

• Formed when between 1 and 50 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 Limited Liability, and the words ltd come after the company name

Private Limited Companies

Advantages

• LIMITED 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 out

Homework Questions

• What 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 Example

Co-Operatives

• Co-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 members

• Co-operatives have LIMITED LIABILITY which means…

• Each member has one vote regardless of the amount of shares they own

Co-Operatives

Advantages

• LIMITED LIABILITY• All members have an equal say• Create Employment• Achieve 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 ability

State Owned Companies

• Formed by the Dáil and owned by the state with a board of directors appointed to run them

• When a government sells a State- Owned company it is called privatisation

• If the government takes over a company it is called nationalisation

State Owned Companies

• Advantages vs Employment. Provide Essential Services Profit-Income for State Keep control over natural resources.-Oil/Gas

Provides Essential ServicesProfitControl over Natural Resources

State Owned Companies

• DisadvantagesMay make a lossLoans

May Make a lossLoans

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 Franchising

Homework

Complete the next slide fully and study each topic carefully for class test

Sole Trader Co-operatives State Body Private Limited Company

Set up

Ownership and control

Liability

Example

Formation Procedure

Profits

Advantages

Disadvantages

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

Advantages 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.