Business structure and liability
| English | Chinese | Pinyin |
|---|---|---|
| legal structure | 法律结构 | fǎ lǜ jié gòu |
| liable | 负有责任 | fù yǒu zé rèn |
| sole trader | 个体经营者 | gè tǐ jīng yíng zhě |
| unlimited liability | 无限责任 | wú xiàn zé rèn |
| partnership | 合伙企业 | hé huǒ qǐ yè |
| shareholders | 股东 | gǔ dōng |
| limited liability | 有限责任 | yǒu xiàn zé rèn |
| incorporated | 注册成立的 | zhù cè chéng lì de |
| assets | 资产 | zī chǎn |
| float | 上市 | shàng shì |
| stock exchange | 证券交易所 | zhèng quàn jiāo yì suǒ |
| regulation | 监管 | jiān guǎn |
| takeover | 收购 | shōu gòu |
Who owns it — and who pays if it fails?
- Two friends running a market stall and a giant like Apple are both "businesses" — but legally they're worlds apart.
- The legal structure 法律结构 decides who owns the firm, who controls it, and who is liable 负有责任 for its debts.
Choose the ownership form
Compare ownership, control and liability in real business types.
A sole trader has:
A sole trader is not incorporated, so liability is unlimited.
The main legal forms
- Sole trader 个体经营者: one owner, easy to set up, keeps all profit — but unlimited liability 无限责任.
- Partnership 合伙企业: 2+ owners share capital, skills and risk; usually still unlimited liability.
- Private limited company (Ltd) and public limited company (plc): owned by shareholders 股东, with limited liability 有限责任.
Legal forms split by liability: unincorporated and incorporated 注册成立的
Limited liability means shareholders:
Their loss is capped at their investment.
An incorporated company is a separate legal identity from its owners.
Incorporation creates a separate legal person, enabling limited liability.
When owners risk their personal assets for business debts, they have ______ liability.
Sole traders and ordinary partnerships have unlimited liability.
Limited vs unlimited liability
- Unlimited liability: the owner is personally responsible for all debts — even their house is at risk.
- Limited liability: shareholders can lose only what they invested — their personal assets 资产 are protected.
Limited liability needs a separate legal identity. Only an incorporated business (Ltd or plc) is legally separate from its owners. A sole trader or ordinary partnership is not, so its owners carry unlimited liability.
A company headquarters: businesses range from sole traders to giant public limited companies
A key feature of a public limited company (plc) is that it can:
A plc can float shares publicly, raising large capital but facing more scrutiny.
Ltd vs plc
- A private company (Ltd) cannot sell shares to the public; shares are sold privately.
- A public company (plc) can float 上市 shares on the stock exchange 证券交易所 — raising large sums, but facing more regulation 监管 and a risk of takeover 收购.
You've got it
- legal forms: sole trader, partnership, Ltd, plc
- unlimited liability risks personal assets; limited liability caps loss at the investment
- only incorporated firms (Ltd/plc) are legally separate and have limited liability