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1.4.1 The options for start-up and small businesses GapFill
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For a new small business, there are a variety of business types to suit the different sorts of products and services which can be sold. For example, if wants to set up on their own, perhaps as a dog groomer or a plumber, then they would be called a trader. This means that there is only one owner; they may have staff, but those staff do not own the business. The sole trader gets to keep all the profits, but if they are ill or want to go on holiday, there may be no one to take care of the business. Sole traders also have liability. This means that the business and the entrepreneurs are one legal entity. This means that if the entrepreneur’s business becomes or a customer sues them, then they could lose their own savings and possessions as a result.
If a group of very skilled or talented people come together to form a business, this would be a . Examples include solicitors, accountants, vets and dentists. As there are more entrepreneurs, there is more start-up capital available, but the profits have to be out among the partners. Partnerships can have unlimited or limited . If a partnership has limited liability, then it means that the business and the partners are separate legal entities, so if they go bust or are sued they will only lose the amount that they invested in the business to begin with and it protects their own , such as their homes and cars.
The last type of business which is suitable for a small business is a limited company, or for short. The ‘private’ part means that the business can issue shares but only sell them privately to friends or family. The 'limited' part means that the business enjoys limited liability, which protects the investors' own possessions. Examples of limited companies are small building companies and hairdressers.