Sole trader: Sole traders are persons who conduct their own business. Most of sole traders have small business. They earn the whole profits of their business; however, they suffer all losses from their business. With sole traders, there is no difference between their business tasks and personal one. They are responsible for paying all business debts. Once the debt exceeds their business earnings, sole traders must use their non-business possession to pay for that.
Partnership: If more than two individual join for business purposes, partnership forms. Normally, partnership forms with the aim of increasing investments or incorporating skills.
Company or corporation: Companies or corporations are organizations that do business tasks and are responsible for their legal issues. Therefore, every debt or liability is not shareholdersâ€™ responsibility but the companyâ€™s. According to Companies Acts, there are two kinds of company: Public limited company and Private limited Company.
Public limited company (Plc): Public limited company is officially traded on a stock market.
Private limited company (Ltd): In private limited company, shareholders could only transfer shares through direct purchase.
Franchises: An individual could buy a license from the franchisor to have the right to produce and trade products under a famous brand in a particular location. (Business Case Studies, n.d.)
These four types of legal form above are popular in business markets.