Individuals trade goods, most people became sole traders, this is still very largely a from of trading today, this can be a physical product or in services.i have expertise in design area so that is what I'm trading.as trade grew individuals needed more money to develop trade and sometimes they would need to make a partnership.
A partnership is where 2 or more people get together to run a business.
If you have a partnership agreement and if business is dissolved then it will dictate where the money where it'll go and you don't have to tell anyone financially what your earning which can be a benefit but there a problems as a partner you will be reliable to settle each other's debts. Both partnership related and privately, this implies trust in fellow partners.
Circumstances developed the sleeping partner when the finance side had no say in the running of the business.
In Victorian times it became evident that more funding was needed as trade grew, to attract this funding the government developed the limited liability firm which is an incorporated firm or company. The indivual was limited to the investment and this made very quick growth in the trade. However to ensure potential investors were protected against various criminals, fraudsters and other such never do wells, limited liability firms must do these things
1) Publish what firm is about.
2) Publish annual returns about the company performance yearly.
3) Lodge all this data with companies house.
4) Have the accounts of the firm independently audited.
You have to be aware of paper work and if you don't do this then you will be fined a lot.
Stopping a limited firm is more difficult, the company in the eyes of the law is counted as a person, and you have a responsibility to look after the company. What is the firms, is the firms not yours.
Other countries have there own variants of this.
However this form limited liability became to small to enable investment on a big scale. This developed the plc, public limited company, shares of plc'a are freely traded on the stock market anyone can join in large or small. Only invest what you can afford what to lose.
All firms have a degree of debt, in essence they use other people's money, use other people's money to make more then the cost of borrowing and running the firm. You must be able to control money flows, know what has been spent on what and have a very good idea of what is going to be spent on what, to manage this debt effectively.
