Types of Business Organisations

TYPES OF BUSINESS ORGANISATIONS
Miss Townsend
September 2021
SOLE TRADERS
The sole trader as the title suggest is a single business
owner. This person may employ several other persons to
work in the organization, but he has to make all decisions,
acquire all the capital required and other resources needed
for the business on his own.

PARTNERSHIP
A partnership business is formed legally by a minimum of

two and a maximum of twenty persons in a business. There
are two types of partnership forms:
Limited Liability Partnership – at least one partner

must have unlimited liability
Unlimited Liability Partnership- all partners have

unlimited liability.
TYPES OF PARTNERS
Ordinary/General Partners: take an active part in the
running of the business.
Sleeping Partners: invest in the business but do not take
an active part in the business.
Limited Liability Partners: assets will not be lost if the
business goes bankrupt.

LIMITED LIABILITY COMPANIES
Limited Liability Companies are companies in which

shareholders/investors are protected as they will not lose
their personal assets if the business goes bankrupt. They
are not liable for the debts of the company beyond their
level of investment. Therefore, if a shareholder buys shares
in a company valuing $5000 then he will only lose that
$5000 invested and his personal assets.
There are two types of limited liability companies.
1. Private Limited Liability Company
2. Public Limited Liability Company
The Private Limited Company only allows friends, relatives

and coworkers to purchase shares and to be a part of the
company. Its privacy is also protected by the fact that unlike
the public limited liability company, it does not have to publish
its balance sheet in the newspaper.
The public limited company allows members of the public to
purchase shares. The shares/stocks of public limited companies
are traded on the stock market.
Legally the private limited company can only have a minimum

of two and a maximum of fifty persons to join. Whereas the
public limited liability company has a minimum of seven
members and there is no limit to the number of shareholders
that can join.
The legal procedures for both these types of companies are

lengthy as they must submit the several documents.
The Companies Act contains the laws relating to companies. To
comply with certain requirements which were laid down by the
Companies Act, the promoters of the company must present the
following documents:
-The Memorandum of Association
-The Articles of Association
-Statutory Declaration
-Certificate of Incorporation
-Certificate of Trading
The private limited company may begin trading after receiving

the certificate of incorporation, but the public limited company
must issue a prospectus inviting the public to subscribe for
shares before a certificate of trading is issued.
COOPERATIVES
They are business entities owned by their members who
purchase shares to join them. They are usually established
because of a need existing among a number of persons who
wish to acquire particular goods and services at a
reasonable cost. For example, members of a credit union
purchase shares in these entities in order to obtain loans at
low interest rates.
There are several types of cooperative, for example,
Retail/Consumer cooperatives and Producer cooperatives.
Shares invested in a retail cooperative are used to buy goods in
bulk at a very low cost and then resold to members. Producer
cooperatives may include a group of farmers who will obtain
raw material at a low cost.
NON-PROFIT ORGANISATIONS
Government Departments include the government
ministries e.g. the Ministries of Finance and Education.
A minister is appointed in charge of each ministry. These
departments are very important to the running of
government.
Clubs and societies (churches, sports club and social
clubs)
Local and Municipal Authorities are government
bodies which are run by elected local officials, e.g., the
Kingston and St. Andrew Corporation (K.S.A.C.) in
Jamaica. These bodies fulfill local needs and allow for
more balanced local development. They carry out duties
such as cleaning gullies and drains and fixing community
roads.

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TYPES OF BUSINESS ORGANISATIONS

owner. This person may employ several other persons to

work in the organization, but he has to make all decisions,

acquire all the capital required and other resources needed

for the business on his own.

A partnership business is formed legally by a minimum of

Limited Liability Partnership – at least one partner

Unlimited Liability Partnership- all partners have

running of the business.

Sleeping Partners: invest in the business but do not take

an active part in the business.

Limited Liability Partners: assets will not be lost if the

business goes bankrupt.

Limited Liability Companies are companies in which

The Private Limited Company only allows friends, relatives

Legally the private limited company can only have a minimum

The legal procedures for both these types of companies are

The private limited company may begin trading after receiving

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