Sole Proprietor

Partnership

Public Limited

Private Limited

The single owner is probably the most basic sort of company. It usually takes the shape of a single person in the company as the only proprietor. Often, the only owner, while that doesnt have to be the case, is also the only employee (Permwanichagun et al., 2014). The exclusive ownership does not require any specific license or filing in order to be created with a State Agency

Partnerships are comparable to single ownerships, except instead of one, they are owned and governed by two or more people. The proprietors can split roles and manage ones money while the other, for example, manages everyday activities. No registration to create a distinct business exists for a general partnership, and in a partnership, the same legal liabilities are also facing a sole proprietorship. Contracts between partners can shift obligation to particular partnership members, but the liability to the company itself cannot be shifted (Horton, Prain and Thiele, 2009)

According to Orts, (2013)limited liability firms are creating a single legal entity that may bear at least some of the obligation of the business owner or owners for debt and legal proceedings, which may reduce or eliminate liability. The business structure is similar to a company, although the company itself is far less structured than a whole firm and gives the owners the same flexibility as a general partner. An LLC is often called a hybrid business model, since it combines some of its benefits with some of the advantages of a general partnership.

A private enterprise is wholly owned by a very small number of persons or other capital providers.

A private firm, like public corporations under the Securities and Exchange Commission standards, does not have to disclose specific information on how it will be subject to public and public scrutiny (Cui et al., 2018).

By selling shares to the public, companies typically have the power to raise a big volume of money from private to public.

However, if, for example, a majority owner seeks to consolidate control, public undertakings are to be taken private. A private corporation does not have stock shares on a public sales exchange and so cannot be exchanged publicly on the secondary market

From a legal point of view, the company does not separate from the person who manages it. Finance flows to the owner through the firm and the owner doesnt even maintain separate bank accounts for commercial funds and personal cash in many circumstances. The owner is also fully responsible for all legal liabilities or debts assumed by the company. Where the enterprises are prosecuted or otherwise brought before the law, the owner in this situation shall be held legally liable for obligation or debt. Since the company does not exist as a single legal entity, the owner cannot transfer liability into the company itself

Sole proprietor

Partnership

Public Limited

Private Limited

·         It requires minimum expense and cost.

·         There is no audits of accounting or company required.

·         Class 4 National insurance paid as a proportion of earnings and Class 2 Fixed Tax National Insurance.

·         Moreover, single business person enjoys all the profits 

·         If one of partner chooses to quit or becomes disabled, the firm is more likely to survive.

·         Responsibilities for daytoday management are divided.

·         Various skills can improve the chances of the company surviving.

·         There may be more capital investment.

·         It can be easier to spend time outside the company

·         The important benefit of the public limited company is the opportunity to issue share capital, especially when it is an exchange which has been recognized.

·         Because they can sold their shares to the public and everyone can invest their money, they are generally far larger than a small private undertaking.

Investment from hedge funds, mutual funds and other institutional traders might also be attracted if the stock is traded on exchanges.

A public limited corporation is often in better position as well as share capital when looking at other alternative financing sources.

For example, the requirements to be a government limited company and keep the bursary list can help increase the credibility of a corporation when issuing company liabilities (and therefore reduces the return the company needs to offer investors).

·         Shareholders may operate the firm directly or employ managers on their behalf to manage the company.

·         Limited liability is the biggest advantage of private limited companies.

·         In addition to limited liability, private limited businesses benefit from tax advantages.

·         The corporations are charged corporate income tax and are often exempt from increased tax rates on personal income.

·         Where greater resources or largescale manufacturing is required, a private limited company is formed to protect lenders interests.

·         Business may make products at a lesser cost with sufficient finance, therefore improving profit and customer pleasure. In addition, the future of the company is safer.

Sole proprietor

Partnership

Public Limited

Private Limited

Debt liability incurred unlimitedly.

As the company grows, access to funding as a single merchant can be challenging.

Limited expansion capacity if the company relies exclusively on your working capacity.

Fewer benefits should the company fail to provide social security benefits or struggle to exist.

Debt incurred unlimited liability.

Discrepancies between partners can cause the company to be in danger.

Any negligence that happens may be borne by all parties.

The partnership is free of legal existence and so the partnership act of 1890 will apply and the partnership will have to be dissolved should anything happen with one of the partners.

The legal and regulatory requirements of a limited public corporation are more expensive than those of private limited enterprises in order to safeguard shareholders. Limited corporations, publicly or privately, can use Companies House to provide more of their details in the public domain than other categories of business. But for public corporations, the necessary level of transparency is far higher.

In addition to having their accounts audited, public limited enterprises usually do not be able to file abridged accounts. More specific information about the business and its performance is necessary in order for a public limited company to provide information which is accessible to anyone wishing to access it.

Analysts are generally scrutinized and receive greater media attention on public limited firms accounts.

Unfortunately, the profit is diluted because the shareholders are not evenly dispersed.

Registered managers of private limited firms are required, including income and spending, to keep perfect records of profit and loss.

These documents shall be maintained for at least seven years and shall be utilised each year to complete the tax returns for the company. Private limited companies also have to pay their employees taxes and insurance.

A private limited firm may be highly costly to establish, because it must not only pay for taxes and insurance for employees but also for any fees or other incidentals involved in the company.

Private limited firms can also be quite complex, thus lawyers and accountants must nearly always participate in the private limited company from the beginning, which can be expensive.

Strengths

Weakness

·         Reduced burden 

There is no loan to be repaid with equity funding. The company must not make a monthly loan payment that can be particularly essential if the company doesnt make a profit initially. In result, businesses may channel more money into their developing firm (Wu, 2011).

·         Sharing of Profit

Investors want a cut of the income and they deserve it. However, if they gain from their value as financial supporters and/or their acknowledgement and experience, it could be a great deal.

·         Issues of credit gone

Issues of credit gone If there is a lack of credibility, equity can be preferable or better suited than debt finance by having a poor credit record or by lack of a financial track record.

·         Control loss

 The cost of equity financing and all its possible benefits is that business must share the companys control.

·         Learn from partners and gain profit

 Anyone can build informal alliances with more skilled or experienced people with equity finance. Some of them may be connected well to allow the company to take use of their knowledge and business network.

·         A potential conflict

 If there are different visions, management styles and ways to operate the firm, sharing ownership and having to collaborate with others can cause some stress and conflict. It can be a problem to take cautious consideration (Zhang, Zhang and Guo, 2019)

Strengths

Weakness

·         Control of retention

 When company agree to finance a loan institutions debt, the creditor does not know how they run firm. All the decisions are taken. The corporate relationship ceases after the debt is fully refunded.

·         Requirements for qualification

To acquire funding one need a good enough credit rating.

·         Tax benefit

The amount company pay is tax deductible, reducing the net liability effectively.

·         Discipline

In order to make repayments on schedule, companies need financial discipline. Take good financial judgment and control when using debt. A debtdependent company can be viewed by potential investors as being a high risk, and could at some point restrict access to equity financing.

·         Easy to schedule

Company know exactly how much money and interest they pay down every month in advance. This makes budgeting easier and financial plans easier.

·         Collateral

Companies can risk certain business assets by agreeing to give the lender with collateral. They may even be required to guarantee the loan directly, which could endanger their own assets

Strengths

Weakness

Debentures can actively support the companys longterm funding.

In comparison with other longterm financing alternatives it is relatively easier to collect funds via debentures.

The raising of money through debentures is also a realistic alternative because it offers both the director and his own personal funds financial safety and reassurance.

Since debentures have a set interest rate over time, estimating the financial costs of the amount to be paid during tenure is relatively easier.

Debtors usually have a greater priority in comparison to other users from the point of view of the creditor. In this connection, the fact that a specific pecking order must be maintained after liquidation is crucial. Debtors are in line with such payments in this respect, too. This provides a stimulus for investors.

Because debentures do not cause dilution of ownership, the voting rights or voting structure of the corporation are not altered. Companies can therefore raise significant amounts of funding without having to worry about them.

Since debenture payments must be made regardless of the magnitude of profit, this suggests that the debenture payments (interest payments) are not entitled for profit shares. They have the right to the flat market interest rate.

No collateral is required for issuing debentures. It is therefore considerably easier to raise money through debentures than standard bank loans.

Each company is equipped with a particular borrowing capability. Thus, organisations with a high gear ratio may not be easily accessible from this option.

Payments of interest must be made irrespective of the profit level at which the company operates.

As debenture is typically provided to companies based on their history and reputation, this alternative may not be readily available for newly founded enterprises.

Investors willing to enter into such a longterm agreement with the debenture issuer may be more difficult to locate. Most debentures have a set interest rate and are issued for 10 years. Riskaverse investors therefore prefer to invest in such enterprises. However, a longterm deal with already established interest rates could be difficult for them.