Different Forms of Business Enterprise, Share Capital and Long-term Debts in Accounting Business

Accounting Business

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Three different forms of business enterprise...............................................................................3
Difference between Equity share capital and Preference share capital.......................................4
Difference between Debentures and Bonds long-term debts......................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business enterprise can be created in different forms of structures (Schölin, Ohlsson and
Broomé, 2017). This report will discuss the need for having such separate structures and various
examples will also be illustrated. Further, different forms of share capital as well as long- term
debts will be evaluated under the context of long term finance sources in this report. Lastly, an
appropriate conclusion summarizing all the key facts will be presented in the report.
MAIN BODY
Three different forms of business enterprise
It can be illustrated that broadly business enterprises can be run in different form of business
structures and amongst those, there are three most prominent structures i.e. company, partnership
and sole proprietorship. Each serves a separate purpose and have different sets of liabilities and
existence. These can be individually discussed in following manner:
 Sole Proprietor: A sole proprietor is an individual owner of the entire business and this is
the simplest form of business structure. However, this kind of structure provides least
security to the owner himself as owner and business are treated as one and same (Oloko,
2021). The security in both financial terms as well as legal aspects is very lax and
basically there is no difference between owner’s personal assets and business’s assets.
For instance, Farro Bakery in Bristol is owned and operated solely by Bradley Tapp. The
income from bakery is treated as his own personal income thus giving benefit of tax as
well.
 Partnership: A business owned in sharing by two or more people who work together as
partners is known as partnership. There are normally 3 types of partnerships i.e. general,
limited and limited liability partnerships. General partnerships are those in which partners
have unlimited liability and personal assets are also at stake. Limited is the one where at
least one partner acts as general partner with unlimited liability and remaining have only
that much liability which is equivalent to their financial stake (LEUCIUC and
CIBOTARIU, 2020). Limited Liability partnership includes all the partners with liability
limited up to their profit sharing ratio and personal assets cannot be used for partnership’s
debts etc. For example, BDO Llp operating in London is an accounting firm where the
partners are not personally liable.