Learn: Business Ownership

Welcome!Great to see you back! Building on your knowledge of the purpose and nature of businesses, today we'll explore different types of business ownership. Understanding this will help you see how businesses are structured and the benefits and drawbacks of each type.

What is Business Ownership?Business ownership refers to how a business is legally structured. This affects how much control owners have, their responsibilities, and their financial risks. Common types include sole traders, partnerships, private limited companies, public limited companies, and not-for-profit organisations.

Sole TradersA sole trader is a business owned and managed by one person. They make all decisions and keep all profits but are personally responsible for debts (unlimited liability). This is the simplest form of business ownership.

PartnershipsA partnership is a business owned by two or more people. They share decision-making and profits. Like sole traders, partners usually face unlimited liability, unless they create a limited liability partnership (LLP).

Private Limited Companies (Ltd)A private limited company has one or more shareholders who own shares of the business. Shareholders benefit from limited liability, meaning their personal assets are protected. However, there's more paperwork and decisions must be agreed by shareholders.

Public Limited Companies (Plc)A public limited company is larger and can sell shares to the public on the stock exchange. It allows the business to raise significant funds but comes with strict legal requirements and accountability to shareholders.

Not-for-Profit OrganisationsNot-for-profit organisations are businesses that aim to benefit the community rather than make profit. They often reinvest surplus funds into their activities. Examples include charities and social enterprises.

Advantages and DisadvantagesEach form of business ownership has pros and cons. For example, sole traders have full control and keep all profits but face high personal risk due to unlimited liability. Public limited companies raise more capital but are complex to manage.

Review Time!Well done! You've learned about different types of business ownership, including sole traders, partnerships, Ltds, Plcs, and not-for-profit organisations. Now let's test your understanding with a few questions.