Types of Companies and their Working

Types of
Companies

Table of Contents
INTRODUCTION...........................................................................................................................3
SECTION ONE...............................................................................................................................3
Types of Companies and their Working.................................................................................3
SECTION TWO...............................................................................................................................5
Explain Different Types of Companies..................................................................................5
SECTION THREE...........................................................................................................................7
Types of Business Structure and Affecting External Factors.................................................7
CONCLUSION................................................................................................................................9
REFERNCES.................................................................................................................................10

INTRODUCTION
The aim of the report is to provide a clear view in respect of different types of company in
the business environment. The report examines the classification of business in accordance with
the size and legal entities accompanied by examples. Further highlights the significance of
organizational structure and the two main structure are briefly shown. The report introduces
PESTLE analysis in order to determine the external factors which are influencing the business
activities.
SECTION ONE
Types of Companies and their Working
Micro Business
A micro business refers to the subcategory of small business and is qualified as ‘micro-
entity’ by meeting the following criteria:-
 Maximum of ten employees or fewer
 Annual turnover of the business to be £632,000 or less
 Balance Sheet must be £316,000 or less
The micro business play a significant role in maintaining the economic viability of the
country. It also contributes by balancing social cohesion across various regions in the United
Kingdom. The micro business contributes in the economy by focusing on specifically the rural
and underprivileged urban communities (Ardito and et. al., 2020). This type of business is
usually started by involving same capital which is often owned, managed and controlled by the
same person. Further it is recognized as family businesses or innovative start- ups brought by the
fresher, possessing zeal and development potential. However, there are 5.7 million micro
business operating in UK and 95.72 percent of all represents as privately owned businesses.
Around 9.1 million people are employed in micro businesses. Thus, this type of business is
valuable for the economy of United Kingdom.
Small Business
The small business is considered as privately owned businesses along with fewer
employees and less size of annual revenue as compared to regular sized business. According to
the Companies Act, 2006 of UK, a small entity is defined as:-
 Must not have more than 50 employees

 Annual turnover not more than £6.5million
 Balance sheet not more than £3.26 million
Even small business contributes towards the economy of the United Kingdom. The business
contributes by providing employment opportunities and further support to the economy both at
local as well as on national level. It is operated independently and is limited in revenue and size.
These types of businesses are privately owned such as sole proprietorship, partnership or
corporation. This type of business functions in every sector and some of the examples are
restaurants or cafes which are privately owned, bakery shops, architectural firms and so forth.
Further small business in the changing environment responds to the demands more quickly as
they are not tied to the bureaucratic inertia. Thus, they are valuable for the local economy (Green
and Martinez-Solano, 2020).
Medium Business
According to the Companies Act 2006 of the United Kingdom, medium- sized business is
defined as follows:-
 Employees not more than 250 in number
 Annual turnover not more than £25.9 million
 Total of Balance sheet not more than £12.9 million
This type of business starts with slow and firm growth of small businesses which are
successful in nature and further company starts gaining significant portion of capital with the
profits and income attained. The medium- sized business bridges the gap between small
business and large entities. Even they are considered as the backbone of the economy which
derives growth by facilitating employment opportunities and by satisfying customers with
new open markets. According to the source they contribute 45 percent of the total
employment and 33 percent towards GDP. Some of the examples are Verdant Leisure with
nearly 250 employees, Crawford Healthcare, Hunter MacDonald and so on.
Large Business
The large business as compared to other types of businesses tends to offer more products
or services to the customers widely (Vyas, 2018). The large business are defined as those
comprising more than 250 number of employees and contributes towards 40 percent of total UK
employment and more than half of turnover. These type of business generally have wide
coverage of distribution network and majorly having presence in other parts of countries. Further