section 2-Limited Company Accounts.pptVIP

Section 2Limited Company Accounts Contents Introduction Summary of Business Organisation Preparing Limited Company Financial Statements … 1. introduction There are three main profit-making business organisation types: Sole Trader Partnership Limited Company 1-1 Sole Trader Sole Trader: Owned, financed and controlled by one individual but can employ other staff. Common in local building firms, small shops, restaurants, etc. Sole Traders: Advantages Easy to set up Personal incentive – keep all the profits make key decisions high degree of control Flexibility Ability to offer personal service Sole Traders: Disadvantages Unlimited Liability Limited access to capital Potential for long hours Pressure of being solely responsible Lack of continuity 1-2 Partnership Owned, between 2-20people Terms of Partnership agreed through contract Common in professions – lawyers, accountants, architects, surveyors, estate agents, vets, etc. Partnerships: Advantages Greater access to capital Shared responsibility Greater opportunity for specialisation Easy to set up Partnerships: Disadvantages Unlimited Liability  However since 2001, Partnerships can apply to be Limited Partnerships All partners liable for the debts of the others Partnership dissolved on death of one partner Potential for conflict Limited access to capital 1-3 Limited Company Limited Companies: Private Limited Company Ltd 私人有限公司 Owned by between 1 and 50 shareholders Public Limited Company PLC 股份有限公司 Owned by minimum of 2 but no maximum number of shareholders Has a separate legal identity – the company can sue and be sued More complex to set up Minimum share capital of ￡50,000 Limited Companies: Must Register with Registrar of Companies at Companies House Certificate of Incorporation – allows the company to trade Shareholders have limited liability – can only lose what they agreed to put into the company – no personal liability PLCs – shares traded on Stock Exch