GCSE APPLIED BUSINESS

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GCSE APPLIED BUSINESS

• Limited Companies

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Limited Liability Companies

• There are two types of limited company private
  limited company and public limited company. Both
  types of company have the following main
  differences from a sole trader or a partnership

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DIFFERENCES

• A limited company is owned by shareholders who
  have bought shares in the company. A company is
  run by the Directors who are paid employees. In
  smaller companies, the shareholders may also be
  the Directors, but in larger companies the
  shareholders may have nothing to do with the
  running of the business. They buy shares in
  return for a dividend (a share of the profits).

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ADVANTAGES OF LIMITED COMPANY

• Owners (shareholders) have limited liability
  shareholders can only lose the money they have
  paid for the shares if the business goes
  bankrupt.
• Unlike a sole trader or partnership, a company
  can continue trading after the death of the
  owners, because it has been incorporated.

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DISADVANTAGES OF LIMITED COMPANY

• More difficult to set up than a sole trader or
  partnership.
• Has to be registered with the Company
  Registration Office at Companies House, Cardiff
• It must have a Memorandum of Association and
  Articles of Association
• Accounts must be sent to the Company Registration
  Office each year, where anyone can inspect them

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PRIVATE LIMITED COMPANY

• Shares in a private limited company can only be
  sold privately cannot be offered to the general
  public
• Often shareholders are members of the same family
• Private Limited companies have Ltd after their
  names

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PUBLIC LIMITED COMPANY

• The public can buy shares in the company
• Being a plc means the company is able to grow
• If a company does well, the shares become more
  valuable. Similarly, if the company trades
  poorly, the shares reduce in value