2.2 Types of Business Ownership

• Sole proprietorship: formation, management, finance, advantages and disadvantages
• Partnership: formation, management, finance, advantages and disadvantages
• Cooperative societies: formation, types, management, finance, advantages and disadvantages
• Choosing a form of ownership

• explore the formation, management, sources of finance, advantages and disadvantages of a sole proprietorship in Kenya
• examine the formation, management, sources of finance, advantages and disadvantages of a partnership in Kenya
• analyse the formation, types, management, sources of finance, advantages and disadvantages of a cooperative for economic growth
• acknowledge the role of sole proprietorships, partnerships and cooperatives

“How are sole proprietorships, partnerships and cooperative societies formed and managed?”

“What are the sources of finance for sole proprietorships, partnerships and cooperative societies?”

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1. Sole proprietorship and partnership
   40 min · 1 practice tasks · quiz
   The two simplest forms of business ownership: how each is formed, managed and financed, and their advantages and disadvantages.
2. Cooperative societies, and choosing a form of ownership
   40 min · 1 practice tasks · quiz
   What a cooperative is, its types, how it is formed, managed and financed, its advantages and disadvantages, and how to choose the right form of ownership.
3. Unlimited and limited liability
   40 min · 1 practice tasks · quiz
   If the business cannot pay, unlimited liability can take the owner's home; limited liability takes only what was invested.
4. What a sole proprietorship is
   40 min · 1 practice tasks · quiz
   One person owns and runs the business, keeps the profit, and is the business in law - the kiosk, boda and stall.
5. Forming and running a sole proprietorship
   40 min · 1 practice tasks · quiz
   Register the name, get the county licence, then the owner manages everything - the simplest formation in Kenya.
6. Financing a sole proprietorship
   40 min · 1 practice tasks · quiz
   A kiosk is funded mainly from the owner's savings, retained profit, supplier credit, hire purchase and small loans - which is why most stay small.
7. Sole proprietorship: advantages and disadvantages
   40 min · 1 practice tasks · quiz
   Easy, profitable for one, private and flexible - paid for with unlimited liability, thin capital, lonely work and no continuity.
8. What a partnership is
   40 min · 1 practice tasks · quiz
   Two to twenty people agree to run a business together and share profits - more capital and skills than one, still usually unlimited liability.
9. The partnership deed
   40 min · 1 practice tasks · quiz
   A written deed sets capital, profit shares, duties, drawings, entry and exit, and disputes - before friends fall out.
10. Types of partners
    40 min · 1 practice tasks · quiz
    Active partners run the firm with unlimited liability; sleeping partners put in money; limited partners risk only their capital and must not manage.
11. Partnership: advantages and disadvantages
    40 min · 1 practice tasks · quiz
    More capital, skills and shared work than a sole trader - paid for with shared unlimited liability, quarrels, shared profit and weak continuity.
12. What a company is
    40 min · 1 practice tasks · quiz
    A company is a registered legal person separate from its owners: it owns assets, owes debts, and can outlive a shareholder.
13. The private limited company
    40 min · 1 practice tasks · quiz
    A private company has limited liability and cannot invite the public to buy shares - the usual form for a family hardware that wants to protect the home.
14. The public limited company
    40 min · 1 practice tasks · quiz
    A public company may invite anyone to buy shares. If listed on the NSE it can raise huge capital - with stricter disclosure.
15. Public versus private companies
    40 min · 1 practice tasks · quiz
    Same limited-liability wall; different doors for capital. Private keeps control; public invites the crowd and the NSE.
16. Cooperative principles in practice
    40 min · 1 practice tasks · quiz
    A cooperative is owned by the people it serves. One member, one vote; open membership; limited liability; it outlives any one member.
17. Types of cooperatives in Kenya
    40 min · 1 practice tasks · quiz
    SACCOs, producer, marketing, consumer, housing and multipurpose cooperatives - each pools a different common need.
18. Matching ownership to the business
    40 min · 1 practice tasks · quiz
    Choose the form by capital, control, risk, skills, continuity and common need - kiosk, lawyers, family Ltd, NSE, or fifty farmers.