A-Level AQA Business Revision Unit 1(Part 8) : Legal Structures - Companies

Company - An incorporated business that is controlled, owned and financed by numerous people.

A company has limited liability. There can be a number of owners through the issue of shares of the business, allowing investors to buy into the firm, and thus have some control over it's running.

A company is also incorporated.

Incorporated - The business and business owner are seen as two seperate legal identities.

This means that if the business was to be sued, or a debt in need of repayment, the firm would have to pay this (through the sale or reposession of assets) instead of the owner/s

Unincorporated - The business and business owner are seen as the same identity.

This type of legal structure is common with sole traders and partnerships who have unlimited liability. This means that if they were sued, or in debt, the owner would have to pay for this through the sale or reposession of their own, personal assets.

There are two main structures to a company:

A Public limited company (Plc) & Private limited company (Ltd.)

Public Limited Company:

- Have shares which anyone can buy

- Can have a large number of owners

- Share prices indicate popularity

- Limited liability

Private Limited Company:

- Ownership determined by number of shares per person

- Shares sold seperately

- Consent of other shareholders needed before more shares are sold

- Limited liability