Study Notes

Different Forms of Business (Overview)

Last updated 7 Aug 2019

Businesses in the private sector can be categorised in two main ways: (1) incorporated and (2) unincorporated businesses.

Unincorporated:

• The owner is the business - no legal difference
• Owner has unlimited liability for business actions (including debts)
• Most unincorporated businesses operate as sole traders
• A small number operate as partnerships

Incorporated:

• There is a legal difference between the business (company) and the owners
• The company has a separate legal identity
• Owners (shareholders) have limited liability
• Most incorporated businesses operate as private limited companies
• A smaller number operate as public limited companies

Share this content: