1. By the end of the lesson you should:
Know what types of business there are in the UK
Be able to explain on what Unincorporated & Corporated businesses are
Be able to explain the characteristics of each form of business

2. UK business ownership This means:
Most businesses in the UK are privately owned.
This means:
They are owned by private individuals
These individuals risk their own money
The owners’ reward is the profit they make.
The concept of risk is important as this defines an entrepreneur. Obviously the more a person invests, the greater the risk of loss. It is also useful to emphasis that although owners can keep the profit (or share it between them) they must first pay tax to the Inland Revenue!

3. Private Limited Company Public Limited Company
Types of Organisation
Public Sector
Private Sector
National Government
Local Government
Sole Trader
Partnership
Private Limited Company
(LTD)
Public Limited Company
(PLC)
Franchise

4. Private ownership options
Sole trader – 1 owner
Partnership – 2 people or more
Private limited companies – often a family-run business with 2 or more owners. The shares of the firm cannot be sold on the Stock Exchange.
Public limited companies – a business with 2 or more owners (usually 1000s) whose shares are bought and sold on the Stock Exchange
Franchises – small business trading with agreement of large firm for a fee
Each option can be discussed in more detail and it is useful if students are asked for examples in their own area. Students should be clear that a sole trader can employ staff, eg the owner of a hairdressing business can employ assistants – but there is still just one owner. Even if a worker cooperative cannot be identified, the Coop retail organisation should be known to most students.

5. Liability
Sole traders and partnerships have unlimited liability. Owners are responsible for all debts and may have to sell personal possessions.
Companies (ltd & plc) have limited liability. Owners can only lose their investment even if the company has huge debts.
It is useful to state that sole traders and partnerships can go bankrupt, but companies go into liquidation. A specific example is also useful, for instance, a shareholder in a large plc valued at £50 million may lose a £4,000 investment in shares but a sole trader could lose his house, savings and other personal possessions if the business owned a large amount of money. Students should therefore note that for risky activities, and/or where the stock is expensive the owner(s) may be better with a limited company.

6. Sole Trader – characteristics
A sole trader is self-employed
Must register business with Inland Revenue
The Sole trader can employ people to work for them.
Responsible for keeping accurate business accounts & completing annual self assessment form
In law, the business and the sole trader are seen as the same thing (unincorporated). You can sue the owner!
If the owner dies – the business ceases to exist
Money for expansion often comes from ploughing profits back in (this reduces the money the owner receives)

7. Partnership – Characteristics
Between 2 and 20 partners
Owned, controlled & managed by partners
Finances from personal savings / borrowed from bank
Again, a partnership is unincorporated. You can sue the partners
Partners don’t have to have an equal share
Need to draw up a Deed of Partnership – legally binding agreement

8. Private Limited Company (Ltd) – Characteristics
Owned by shareholders (family or friends)
Run by the Board of Directors – elected by shareholders
Must hold an Annual General meeting (AGM)
Incorporated – company has a separate legal identity from its owners
Limited Liability

9. Public Limited Company (Plc) – Characteristics
Owned by shareholders (anyone over 18)
Shares sold on Stock Exchange
Must have sold more than £50,000 of shares
Share prices rise and fall
Run by the Board of Directors – elected by shareholders
Must hold an Annual General meeting (AGM)
Incorporated – company has a separate legal identity from its owners
Limited Liability

10. Activity:
Collect am envelope and go to the corner of the room relating to the card in your envelope.
Complete the task in your corner.
Whole team put your hand up once you've finished.

11. Things to think about: Which team won?
Why did they complete the task so quickly?
What problems did your groups have?
Which team produced the most?
How should you share the profit your business made?

12. Task:
Write down the characteristics of the firm that you are in on your sheet
Move clockwise to the next firm and write down their characteristics
and the next 2

13. Private Limited Company (Ltd) Public Limited Company (Plc)
Sole Trader
Partnership
Private Limited Company (Ltd)
Public Limited Company (Plc)
No. of owners
Liability
Usual amount produced: rank 1-4
How are profits distributed?
Characteristics

14. Private Limited Company (Ltd) Public Limited Company (Plc)
Characteristics Continued
Sole Trader
Partnership
Private Limited Company (Ltd)
Public Limited Company (Plc)

15. Private Limited Company (Ltd) Public Limited Company (Plc)
Sole
Trader
Private Limited Company (Ltd)
Public Limited Company (Plc)
Partnership