1.2.2—Business ownership

Sole traders and partnerships are usually owned by individuals, while companies are separate legal entities with ownership divided into shares. Ownership affects decision control, liability, continuity and finance.

Limited liability can protect owners’ personal assets, but incorporation brings reporting, legal and governance obligations. The best form depends on objectives and scale.

A growing design studio may incorporate to separate business debts from owners’ personal assets, but accept more administration and possible dilution of control.

“Limited liability” does not remove every risk, and a company is not automatically more profitable than a sole trader.