1. 2a Business ownership Part 1

1.2a Business ownership Part 1 UK business ownership This means:  They are owned by private individuals  These individuals risk their own money  The owners’ reward is the profit they make. Most businesses in the UK are privately owned.

1.2a Business ownership Part 1 Private ownership options  Sole trader – 1 owner  Partnership – 2 people or more  Private limited companies – often a family-run business with the protection of limited liability  Public limited companies – large organisations whose shares are traded on the Stock Exchange  Franchises – small business trading with agreement of large firm  Cooperatives – collectively owned by workers/customers

1.2a Business ownership Part 1 Key difference  Sole traders and partnerships have unlimited liability. Owners are responsible for all debts and may have to sell personal possessions.  Companies have limited liability. Owners can only lose their investment even if the company has huge debts.

1.2a Business ownership Part 1 Sole traders  Easy to set up and give a personal service  Owner independent – can make quick decisions  Minimum of paperwork  Knows customers – helps to avoid bad debts  Unlimited liability  Long hours, no cover for holidays/sickness  Capital may come from savings  Needs business skills  Business ends on death Benefits Drawbacks

1.2a Business ownership Part 1 Partnerships  Easier to raise capital  Problems/ideas can be discussed  Greater range of skills/expertise  Cover for holidays/sickness  Unlimited liability  Profits are shared  May be disagreements  Decisions/actions legally binding on all partners  Death of a partner means share needs repaying Benefits Drawbacks

1.2a Business ownership Part 1 Key points about companies  Each company has its own identity in law.  The company employs staff, not the owner(s).  The company owns assets, not the owner(s).  The company operates until it is formally wound up or goes into liquidation.  The company pays corporation tax on its profits.

1.2a Business ownership Part 1 Private limited companies  Limited liability  Minimum of 1 director and 1 shareholder  Easy to set up/affairs still private  Easier to raise capital/borrow from bank  Share transfers need agreement of all  Cannot sell shares to the public  More regulations to comply with  Accounting procedures may be more costly  Death of shareholder has no effect on company BenefitsDrawbacks

1.2a Business ownership Part 1 Public limited companies  Limited liability  Increased capital as public can buy shares  Minimum of 2 directors and 2 shareholders  Shares increase in value if company successful  Operating large scale can lower costs per unit  Many regulations to comply with  Accounts (and problems) are public knowledge  Shareholders may sell shares if dividends poor  Original owner may lose overall control Benefits Drawbacks

1.2a Business ownership Part 1 Review of main types of private ownership  Sole traders – suitable for one person running small business with low risk/little investment required  Partnership – suitable for professional groups, husband/wife businesses, small business needing different skills  Private limited company – suitable for family business, essential if risk considerable, eg through expensive stock  Public limited company – suitable for large national/international operations