The Small Business

Many of the larger businesses in the UK are public limited companies which means that the public is able to buy and sell their shares on the Stock Exchange. Such companies have the letters plc after their name, and examples include Marks and Spencer, Guinness and the National Westminster Bank. However, since the minimum share capital for a public limited company is 50000 pounds, this makes it an unsuitable choice for small businesses, which are more likely to take one of the following forms:

Sole Trader or Sole Proprietor
This is the simplest way of a starting a business. You are self-employed and entirely responsible for all aspects of running your own business. This is especially suitable for small retail businesses.

Partnership
When two or more people want to start a business together they can set up a partnership and agree on how the business will be operated. All partners are responsiblefor the debts of the partnership and profits and losses are shared between them.

Private Limited Company
A company can be formed with a minimum of two people becoming its shareholders. In order to establish such a company, specific administrative procedures must be followed. For example, the shareholders must appoint a director and a company secretary. If the company goes out of business the responsibility of each shareholder is limited to the amount of money that they have contributed. A private limited company has the letters Ltd. (Limited) after its name.