Section 1 – Sources of Fund
There are 5 main types of organization ownership:
• Sole speculator
• Exclusive limited business (Ltd)
• Public limited company (Plc)
Each of these types of business needs to raise financial for capital investment
This is a business that is owned simply by one person. Only Traders are responsible for raising all the financial to set up and run the business enterprise. Usually a sole trader would be for a small business/ (businesses using a flat efficiency structure). A Sole Speculator can be held accountable for all the bills of the company. Most owners like to think in control of their particular business, so this may lead to many small businesses to stay as Only Traders, although this will limit funding. Singular Traders do not legal thank you's to go through, besides registering pertaining to VAT if their turnover extends to a certain amount.
This is a business that owned or operated by a number of individuals between two to 20. Almost all partners can contribute to the funding of the business to help control the success of the company. A partnership can also be held responsible for all the debt of the company. Having even more partners available will cut down the amount of control that the owners have within the business. Partnerships have no legal formalities nevertheless may choose to indication a Deed of Collaboration.
Private Limited Company (Ltd)
This is an enterprise that is owned by investors (friends and associates). Non-public limited firms could offer shares to family, good friends and affiliates. The owners of the non-public limited firm can be held responsible up to the worth of their expenditure in the business. Usually when building limited firms, they have to develop two paperwork; Memorandum of Association and Articles of Association.
Community Limited Firm (Plc)
This is a business that is owned by shareholders (the general public). Public organisations are usually run by the govt. Public limited companies can raise financing by selling shares on the currency markets.
Sole trader/ Partnership
Personal Capital – this is the funds that an individual, partner or perhaps shareholder offers saved up to aid in the process of running the business enterprise. If the person uses the money to invest in their particular or another organization, then the method to obtain finance can be classified since personal financial savings.
|Advantages |Disadvantages | |It is a quick way of financing the business |If the business will go bankrupt then a individual is usually to | | |lose the money in the process and will not get the money again | |You wont have to pay it back in case you lose the bucks in the | | |business |
Retained revenue – This is when a business makes a profit and keeps it and will not spend that, the financing department just call it Retained Profit. The retained earnings will be helpful for the business in buying important features such as fresh machinery, cars, computers and this money will be used to develop the business. Retained earnings is also retained for the future in the event the business goes bankrupt.
|Advantages |Disadvantages | |If the retained profit is retained in advance, and after that the |If you use the maintained profit to formulate the business including | |business goes broke, at least it could make use of the retained |buying new machinery then you wont be able to reward staff pertaining to | |profit to help this in its finance |their work and keep all of them motivated | |Easily attainable and no interest charge for the retained |The...