Types of business organisation
| English | Chinese | Pinyin |
|---|---|---|
| liable | 负有责任 | fù yǒu zé rèn |
| sole trader | 独资企业 | dú zī qǐ yè |
| partnership | 合伙企业 | hé huǒ qǐ yè |
| unlimited liability | 无限责任 | wú xiàn zé rèn |
| private limited company | 私人有限公司 | sī rén yǒu xiàn gōng sī |
| public limited company | 公众有限公司 | gōng zhòng yǒu xiàn gōng sī |
| shareholders | 股东 | gǔ dōng |
| limited liability | 有限责任 | yǒu xiàn zé rèn |
| creditors | 债权人 | zhài quán rén |
Who owns the business?
- A one-person market stall and a global company are owned in completely different ways.
- The type of business organisation decides who owns 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 personally liable for all debts.
A partnership has two or more owners who share the capital and risk.
Partners share ownership, profit and (usually) unlimited liability.
When owners risk their personal possessions for business debts, they have ______ liability.
Sole traders and partnerships usually have unlimited liability.
Sole trader 独资企业 and partnership 合伙企业
- Sole trader: one owner. Easy to set up, keeps all profit — but unlimited liability 无限责任.
- Partnership: 2+ owners share capital, work and risk; usually still unlimited liability.
Business types split by liability into unincorporated and incorporated
Limited liability means shareholders can lose:
Their loss is capped at their investment.
An advantage of becoming a limited company is:
Limited liability protects owners' personal assets.
Limited companies
- Private limited company 私人有限公司 (Ltd) and public limited company 公众有限公司 (plc) are owned by shareholders 股东.
- They have limited liability 有限责任: owners can lose only what they invested.
Businesses make goods and services to meet people's needs and wants
Comparing them
- Sole trader/partnership: simple and private, but risky (unlimited liability), hard to raise finance.
- Companies: can raise more finance and protect owners, but face more rules and shared control.
Unlimited liability puts personal assets at risk. If a sole trader's business fails, creditors 债权人 can take the owner's personal possessions. A shareholder in a limited company cannot lose more than they invested.
You've got it
- sole trader (one owner) and partnership (a few) — usually unlimited liability
- Ltd and plc are owned by shareholders with limited liability
- companies raise more finance and limit risk, but face more rules