Other types of business structures
Unlimited companies
The shareholders of an unlimited company have ultimate liability, meaning they must pay any debts the company can’t pay. This liability is included in the company’s constitution. Unlimited companies are used to meet very particular, often foreign, legal requirements.
Co-operative companies
Co-operatives are member-owned and controlled businesses that are run for the benefit of all their members. It’s a way of doing business that can prove successful over a long period and can be used in almost any business sector.
With a co-operative, a group of businesses can join to achieve business goals not always possible operating alone. While co-operatives mostly work in the same way as other businesses, there are some differences, including the following:
- They are owned and run by their members – the people who use the co-operative’s services or buy its goods, not by outside investors.
- They return surplus income to their members based on how much a member has used the co-operative, rather than by how big their investment is or by how many shares they have.
One benefit of operating in a co-operative is having increased buying power as a group so members can buy goods for less.
Limited partnerships
Limited partnerships are different from unincorporated partnerships because they involve:
- general partners, who are liable for all the debts and liabilities of the partnership
- limited partners, who are liable to the extent of their capital contribution to the partnership.
Trusts
A trust is created when a person (the settlor) transfers property to named people (trustees) to be held for the benefit of people chosen by the settlor (the beneficiaries).
The settlor outlines how they want the property to be dealt with, and trustees must follow those directions. Usually there are instructions around managing and protecting the property for beneficiaries.
A trust is given a name and is often referred to as though it’s a separate entity – like a company – but it’s not.
Businesses aren’t normally run through a trust, but a trust can be part of a business structure. It’s a good idea to get expert advice when creating a trust.
Charitable trusts
Charitable trusts can be set up by any individual or group to benefit a charity. It’s a good idea to get expert advice on whether this option is right for what you want to do. Talk to a lawyer or your accountant.
Incorporated societies
Incorporated societies are best for things like sports clubs, social clubs, music and cultural groups, special interest and purpose organisations.
An incorporated society is a group or organisation that has been registered under the Incorporated Societies Act 1908 and, when incorporated, is authorised by law to run its affairs as if it were an individual person.
This means that the members are not personally liable for the society's debts, contracts or other obligations, and members do not have any personal interest in any property or assets owned by the society.
Industrial and provident societies
An industrial and provident society usually involves small business owners who operate independently but create the society for mutual benefits – for example, a co-operative taxi society with independent operators benefiting from a shared car insurance scheme.
Friendly societies
A friendly society is formed to help members and their families during sickness, old age or bereavement. Funds come from the voluntary subscriptions of members or donations.
Building societies
A building society is a mutual organisation (owned by its members) that offers financial services, like mortgages for members. Funds are raised by selling shares to members, who usually pay by subscription over time.
Credit unions
Credit unions are financial organisations owned by members, that provide savings and loan facilities for members. A common bond must exist among the members – for example, living in a particular area or working for a particular employer. Members invest their savings and receive a dividend.
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