1.2.2—Main for-profit organizations

For-profit legal forms differ mainly in who owns and controls the business, how it raises finance, whether the owners are personally liable, and how easily the business continues if an owner leaves.

A sole trader keeps control but usually bears unlimited liability and has limited finance. Partnerships share control and resources but require agreement. Companies are separate legal persons: limited liability protects owners in normal circumstances, while public companies can raise equity from a wider market and face stronger disclosure pressures.

Choose the form by matching the founder's priorities: control, risk protection, growth finance, continuity and reporting obligations. There is no universally best form.

A designer testing a low-risk local service may accept sole-trader simplicity. A manufacturer borrowing heavily may prefer a company because limited liability reduces personal exposure, but it accepts setup, reporting and governance costs.

Limited liability is not immunity from every loss or unlawful act, and public company does not mean state-owned. Keep legal form, ownership sector and funding source separate.

A privately held company has separate legal identity and limited liability, but its shares are owned privately and are not offered to the general public; this can preserve concentrated control while limiting access to public equity. A publicly held company may sell shares on a stock exchange, expanding finance and liquidity but increasing disclosure, governance pressure and possible separation of ownership from control. Both differ from a public-sector organisation: 'publicly held' describes share ownership, not state ownership.