Types of business enterprise and comparison of long term sources of finance for public limited company

Types of business enterprise

Table of Contents
Task 1............................................................................................................................4
Existence of different types of business enterprise...................................................4
Task 2............................................................................................................................5
Comparison between two form of share capital and two form of long term debt in
context of long term sources of finance of public limited company.........................5
Conclusion:...................................................................................................................7
References.....................................................................................................................8

Introduction
Business enterprise is a business entity that is established by the person when they see any opportunity.
The person who established the business is known as entrepreneur. Enterprise are those business entity
which manufacture or sale various types of goods and services. They are set so that they can earn profit
from it. There are different types of enterprise such as sole trader, partnership, private limited company
and public limited companies. Here the entrepreneur takes risk to run the business (Barane and Hake,
2018). Business enterprise can be big or small, there is no predefine scale. The complexity to manage the
business activity depends upon the size of the business. So, managing the enterprise is also important and
requires wide range of activity. In this report the topic which will be covered are existence of different
types of business enterprises and the comparison between the two type of share capital and long term debt
(Brown, 2018).
Task 1
Existence of different types of business enterprise
There are three types of business enterprise that are sole traders, partnership and the companies. The
function of all the enterprise is different and work in different way. The three enterprises exist in the
business is because of their size and scale of operations. Let discuss each one by one:
a) Sole traders: A sole proprietorship is a incorporate business entity that is owned and mange by
the single person. This type of entity is the most simplest. This type of entity exists because there is
no need to form a separate entity for the business. These also offer less degree of legal and financial
protection to the owner. The owner of the business is the person who is liable for all the liabilities
and the losses. This type is creating for those people who want to have full control over the
business and do not want to share the profit that incur while doing operations. In this type the
owner also get the tax benefit as their personal income is only considered as a income of the
business and tax is paid on it only ( Xu, Chen and Wang, 2020).
Example of this type of business entity is local General store, beauty parlour, sweet shop, freelancer etc.,
are the person who owned the business as a single individual.
b) Partnership: A partnership is that type of business entity that is owned and run by two or more
person who is known as the partners. They also enjoy the benefit of tax as the partners personal
income is only considered as business income and tax is paid on that amount. This entity exist so