1. Business’ legal structure (1) Lesson aims: To distinguish between unincorporated and incorporated businesses To know the differences between sole traders, partnerships, private limited companies (Ltds) and public limited companies (PLCs) To explain at least three advantages and three disadvantages of each legal structure

2. Starter (6 minutes) Write a definition of: a)Unlimited liability b)Limited liability c)Sole trader d)Partnership e)Private Limited Company (Ltd) f)Public Limited Company (PLC)

3. Recap: What is the difference between quantitative and qualitative information? Explain each sampling method What is a confidence interval? What are the factors that influence a choice of sampling method?

4. Business’ legal structure Firms must choose the appropriate legal structure that is most suited to their needs; start-ups are inevitably smaller and have less choice, but can grow and develop. Much depends on being unincorporated or incorporated.

5. Unincorporated vs. incorporated Unlimited liability. Sole traders and partnerships. No distinction between owners and business in law. If go into debt, can lose personal possessions. Don’t have to publish accounts. Can become bankrupt. Limited liability. Private Limited Companies (Ltds) and Public Limited Companies (PLCs). Owners and business are separate legal entities. If debts occur, shareholders are liable for their shares and what they invested. Must publish accounts. Companies become insolvent.

6. Sole trader One person owns and runs the business. Suited to small firms. Owners can employ others. Examples include hairdressers, gardeners and painter/decorators. Owner makes all decisions and keeps all profit.

7. Partnership Between 2-20 owners. Owners share profits and responsibility; can have specialists, more flexible. Must draw up a Deed of Partnership. Examples: Accountants, Lawyers, and dentists. Limited liability partnerships (LLPs) have been possible since Limited Liability Partnership Act (2000).

8. Private Limited Company (Ltd) Owners are shareholders; shareholders must be invited, often friends and family. More able to gain finance and invest. Must have Ltd in their name. Usually smaller than PLCs, as growth is limited. However, more businesses are choosing to be Ltds.

9. Public Limited Company (PLC) The largest companies, must have at least £50,000 capital. Can sell shares on the stock exchange; easy to grow and raise finance. In danger of being taken over if 51% of shares get bought. Shareholders have AGM and help decide objectives; loss of control for original owners.

10. Read: Ownership table, p.80.

11. Homework This week’s reading is Chapter 7, p. 74- 84. Remember to revise for Friday’s test. Homework: Staying private, p. 84. In for Wednesday after half term.

12. Questions (6 minutes): 1.What is the most appropriate type of ownership for a new start-up business? 2.What factors does the choice of ownership depend on? 3.Why might a sole trader or partnership find it difficult to grow?

13. So… What are the differences between unincorporated and incorporated businesses? What is a sole trader? Examples? Advantages? Disadvantages? What is a partnership? Examples? Advantages? Disadvantages? What is a limited liability partnership? What is a private limited company (Ltd)? Examples? Advantages? Disadvantages? What is a public limited company (PLC)? Examples? Advantages? Disadvantages? What factors affect the type of ownership chosen by a business?