Titel: Forms of companies
Fach: Englisch
Trimester: 2.

Autor: Alexandra Kramer
E-Mail: alexfaerwer@web.de
Datum: 21/08/2000 ;

Sole Proprietor
= Einzelunternehmer
= simplest way of starting a business
= is especially suitable for small retail business

Advantages

1. to set up you need only a small amount of money
2. independence
3. easy to make (quick) decisions
4. no need to share profits with sb
5. personal contact with all customers and the whole Business

Disadvantages

1. unlimited liability=if the owner is unable to pay the creditors, they can take the owner´s personal possessions
2. 2.owner can suffer from lack of continuity ( if the owner is ill or unable to run the business)
3. owner has to provide all the capital
4. it is difficult to obtain loans because a sle proprietor is a bigger risk than a large business.

Partnership
= GbR / OHG
= when 2 or more people want to start a business together they can set up a p. and agree on how the business will be operated

Advantages

1. easily formed
2. greater continuity than sole trader
3. more people are available to contribute capital to the business
4. Expense and management of the business are shared
5. shared risks
6. shared losses

Disadvantages

1. generally unlimited liability
2. possible conflicts between partners
3. each partner is fully liable for the debts of the business
4. membership limit of twenty restricts resources of busin.
5. shared profits

Private Limited Company Ltd
= Gesellschaft ( GmbH)
= a company can be formed with a min. of 2 people becoming it’s shareholders
= min. of capital:

Advantages

1. more than 2 people can contribute capital
2. greater continuity than smaller businesses
3. limimited liability
4. if the company goes out of business,responsibility of each shareholder is limited to the amount of money that they have contributed

Disadvantages

1. may be limited in the capital the owners can raise because shares cannot be offered for public sale
2. capital raising possibilities can be further reduced if they restrict share transfer
3. audited accounts have to be available for inspection
4. large-scaled specific administrative procedures must be followed

Public Limited Company plc
= Aktiengesellschaft (AG)
= the public is able to buy & sell their shares on the Stock Exchange
= min. of capital: 50.000

Advantages

1. have limited liability
2. enjoy maximum continuity
3. can raise large sums of capital
4. large size enables them to enjoy "economies of scale", such as being able to buy supplies in bulk
5. size allows them to buy special equipment which will save in labours and expense
6. it is easier to borrow money because they are less risk than smaller firms
7. choice for smaller businesses

Disadvantages

1. formation involves considerable documentation and expense
2. company, emplyees and share-holders become too detached from one another because of large size
3. ease of transfer to share owner-ship can lead to "takeover" bids for company
4. tend to develop too many rules
5. annual accounts of the company are open to publish inspection which reduces confidentiality of the firm