Forms of Ownership: By-Himanshu Sahdev

FORMS OF
OWNERSHIP
BY- HIMANSHU SAHDEV
What is ownership?
1. Business ownership refers to the legal and financial control over a
business entity. It encompasses the rights and responsibilities of
individuals or entities who own and operate a business or company.
Business owners have the authority to make decisions, manage
resources, assume risks, and enjoy the profits or bear the losses
generated by the business.
2. Understanding the concept of business ownership is essential when

starting a business as it determines the level of control, liability, and
decision-making power one has over their enterprise.
2
Forms of ownership?
1. Sole Proprietorship
2. Partnership
3. Private limited companies (LTD)
4. Public Limited Companies, PLC
3
Sole Proprietorship
1. This is the most common form of business ownership and the simplest. Sole
proprietorship means that a business is owned and directed by one
individual. This individual owns all the rights to run the business however
they deem fit.
2. Advantages of a sole proprietorship

• All income earned belongs to the sole proprietor, who also owns all
business assets.
• It is the simplest of all the business structures to set up.
• It provides the proprietor with flexibility in running the business.
• The sole proprietor gets to make all business decisions.
• Absence of corporate tax.
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1. Disadvantages of a sole proprietorship
• The proprietor bears personal responsibility for all business debt and losses.
• There is little to differentiate between personal and business income.
• Raising capital is the responsibility of the sole proprietor.
5
Partnership
1. This business ownership structure means two or more people own a
business. Partnerships are of two types, namely:
2. General partnership - this involves an investment from all partners, and all
partners bear the responsibility for any debt incurred by the business. The
partnership usually doesn’t need a formal agreement as it could be verbal
between business owners.
3. Limited Liability Partnership, LLP - LLP provides protection for each
partner against debt incurred by the other partner(s). It usually requires a
formal agreement between partners to protect each from the actions of the
others.
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Advantages and Disadvantages of
having Partnership
1. Advantages of partnership
• Business capital can be easily generated from each partner's resources.
• Profits from services offered by the business are shared between partners.
• Ownership and decision making are shared by partners .
• Greater capacity for loans.
1. Disadvantages of partnership
• Partners are responsible for losses or debt incurred by the business.
• The risk of friction among partners can be high.
• Partners can be held liable for the actions of other partners.
7
Private Limited Companies(LTD)
A private limited company - also referred to as LTD - is an incorporated
business entity that is privately held and controlled. The ownership of the
business is divided by shares in the company. Those who own the shares are
known as shareholders.
This type of business ownership provides limited liability to the owners.

Limited liability provides the shareholders' personal assets with protection from
liabilities incurred by the business.
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having LTD
1. Advantages of private limited companies
• Private limited companies provide limited liability to their shareholders.
• Shares cannot be sold to the public (the current owners decide to whom they will sell
them). Therefore the company is protected from loss of ownership and control.
• Due to incorporation, LTDs can continually exist even after the death of an owner.
1. Disadvantages of private limited companies
• Shares can only be sold in-house, and can’t be traded with the public.
• It is expensive to set up due to administrative and legal costs.
• They must be registered with the company registrar.
• Legal paperwork is necessary for starting up an LTD.
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Public Limited Companies
1. A Public Limited Company is like a Private Limited Company with
the distinction being that the number of investors of a Public
Limited Company can be boundless with a base of seven
individuals.
2. It is commonly hard to set up a public limited company. A Public
Limited Company can be either recorded in a stock trade or stay
unlisted. A Listed Public Limited Company enables investors of the
organization to exchange its offers uninhibitedly on the stock trade.
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having PLC
1. Advantages of limited liability companies
• Capital can be easily generated through trading shares publicly.
• Owners have limited liability.
• Publicly listing shares makes it easier to attract investors.
1. Disadvantages of limited liability companies

• Anyone who can afford to buy a share can be a shareholder.
• A board of directors is needed to run the organisation.
• They are exposed to public scrutiny and regulations.
• They may be at risk of a takeover if someone buys up a majority of the
shares available.
11
THANK YOU
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FORMS OF

2. Understanding the concept of business ownership is essential when

2. Advantages of a sole proprietorship

This type of business ownership provides limited liability to the owners.

1. Disadvantages of limited liability companies

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