Unit 12

TYPES OF BUSINESSES

Learn the active vocabulary of the Unit and be ready to use it in your further work.

 

public limited company - (= амер. close corporation) акціонерна компанія з обмеженою відповідальністю (включає значну кількість акціонерів); private limited company –(= амер. open corporation) акціонерна компанія з обмеженою відповідальністю (включає меншу кількість акціонерів порівняно з public limited company); partnership – партнерство; red tape – бюрократичні перепони; liability- грошові зобов’язання, пасиви;

authority- орган (влади); assets – активи; to wind up a business – згор-тати бізнесову діяльність; to be at stake = to run/take/ to be at risk - ризикувати; to incur (to run up) debts – влазити в борги; majority stake- контрольний пакет акцій; deal – операція; logo – логотип; recession - спад економіки; headquarters-головний офіс.

Text A

You have a choice to make on how you legally organise your business, as a sole trader, partnership or limited company. Broadly speaking, sole trader is the simplest and limited company the most complex way of setting up business, but each of the three methods provides advantages and disadvantages according to the type of business you operate. However, the following guidelines will help you in the early stages.

Sole trader (UK) or sole proprietor (UK and US) embodies the spirit of the small businessman or woman. It is you, on your own, making the go of it and the red tape is very simple. All you need to do is to tell the Income Tax and Social Security authorities that you are working for yourself and off you go. Even the bookkeeping and accounting side should be very straightforward, although it is always helpful to seek an accountant’s advice. You are, however, totally responsible for any liabilities you incur in your business, which means your personal as well as your business assets may be at risk.

Partnership. A partnership shares many of the characteristics of being a sole proprietor in that it is simple to establish, but it involves two or more people jointly running the business.

Althoughyou do not have to formally register a partnership, it is very strongly advised that you draw up a partnership agreement with the help of a solicitor. Among other things, this will outline exactly who has put what into the partnership, how the profits will be split, who does what work and what will happen if the business is wound up. On top of the legal bases, you must ensure that you can trust your partner, because in theory at least, everything is at stake – each partner is personally liable for all the debts incurred by the business.

Limited company. A limited companyis different from sole trader or partnership in that it is an entity separate from its owners. Limited companies have the following characteristics and requirements.

- they need to be registered;

- they are owned by the shareholders;

- they are managed by directors who are appointed by the shareholders. In the majority of small limited companies the directors are also the shareholders.

Generally speaking the terms unlimited and limited liability indicate that the owners of a business either have, or do not have, responsibility for the repayment of debts. It should be pointed out that limited liability generally concerns only Private and Public Limited Companies (UK) or open and close corporations (US) whereas other forms of business organisation usually involve unlimited liability.

Private limited company can be formed with a minimum of two people becoming its shareholders. They 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 that they have contributed; they have limited liability. Only a private limited company has Ltd (limited) after its name.

Many large businesses in the UK are public limited companies (plc), which means that the plc’s can trade their shares on the open market. Examples include Marks & Spencer and British Telecom. The minimum share capital for a public limited company is £50,000, so many new businesses are likely to take one of the above mentioned forms.

In the US, businesses take the same basic forms. However, American companies are registered or incorporated with the authorities in the state where they have their headquarters. The abbreviations Inc and Corp refer to such companies. To sell shares to the public they must apply to the Securities Exchange Commission.

Notes: Social Security –відділ соціального забезпечення

Securities and Exchange Commission – орган у США, який

слідкує за дотриманням правил ведення операцій на біржах

 

Exercise 1. Read the text and answer the questions.
1. What is the simplest way of setting up a business?
2. With what form of business is the red tape most complicated?
3. What forms of business share the same characteristics?
4. Why is it so important to draw up a partnership agreement?
5. Which of the businesses is separate from its owners?
6. What are characteristics and requirements of limited companies?

Exercise 2. Match the word/phrase with the synonym.

1) to run	a) to cover
2) to make a go of it	b) to be responsible for
3) to split	c) to bring to the end
4) to be liable for	d) at risk
5) at stake	e) to operate
6) to incur debts	f) to divide
7) to pay off	g) to run up debts
8) to claim	h) to achieve a success
9) to wind up	i) to ask for, to take or state that you should have

Exercise 3. Read the text again and decide if the following statements are true (T) or false (F).

1. Setting up any new business in UK you have first thing to register it.
2. A sole trader is self-employed and has to overcome challenges on his own.
3. All partners are responsible for the debts of the partnership, and profits and losses are shared between them.
4. If you wish to start a public limited company you should have a big sum of money at your disposal.
5. Director of a limited company usually is the one who holds the majority stake.

Exercise 4. Complete the following sentences using appropriate preposition from the box or no preposition at all.

for (x2) on off with

1. The advice of an accountant and solicitor … which business is the most suitable arrangement for you is quite necessary.

2. You have to tell the authorities that you are working … yourself.

3. A sole trader is responsible … any debts incurred.

4. If your partner is not the right person you will have to pay … the debts he has run up.

5. A limited company often involves working … other people.

6. It is important that you can trust … your colleagues

Exercise 5. Complete the sentences choosing the appropriate form.

1. The most complex way of (set, setting, to set) up a business is limited company.

2. Annual accounts of your company should be properly (audit, audited, auditing).

3. You have to be able to (trusted, trust, trusting) your colleagues.

4. The directors (managed, managing, manage) limited companies are appointed by shareholders.

5. The rules for (manage, managed, managing) the company, are set out in a special document (calling, called, call) “Memorandum”.

 

Exercise 6. In pairs, decide which of the advantages and disadvantages below you would associate with the following forms of business. In some cases there may be more than one correct answer.

 

A sole trader a partnership a private limited company

 

Advantages

1. You have total control of your business.

2. This is a good way of sharing the pressure and work of starting a business.

3. The financial risks that you are taking are restricted.

4. You can increase your capital by selling shares

 

Disadvantages

1. There is a danger that conflicts of personality could ruin your business.

2. It may be difficult to expand.

3. You may have to sell your possessions if the company goes into debt.