Learn: Business Ownership

Welcome!You've already learned about the purpose and nature of businesses. Now, let's build on that by exploring the different types of business ownership and their key features.

Types of Business OwnershipThere are several ways a business can be owned. These include sole traders, partnerships, private limited companies (Ltd), public limited companies (Plc), and not-for-profit organisations.

Sole TradersA sole trader is a business owned and run by one person. They have full control but also unlimited liability (their personal assets are at risk if the business fails). Sole traders are common for small businesses like hairdressers or local shops.

PartnershipsA partnership involves two or more people running a business together. They share responsibility, decision-making, and profits. Partnerships also have unlimited liability unless set up as a Limited Liability Partnership (LLP). Examples include law firms and accountancy practices.

Private Limited Companies (Ltd)A Ltd is owned by shareholders but does not sell shares publicly. It offers limited liability, meaning owners' personal assets are protected. These businesses are often family-run or small companies.

Public Limited Companies (Plc)A Plc sells shares to the public on the stock exchange. This allows them to raise large amounts of capital. Like Ltds, they offer limited liability. However, they must disclose financial information to the public.

Not-for-Profit OrganisationsA not-for-profit organisation operates to benefit society rather than make profits. Any surplus income is reinvested into the organisation. Examples include charities and community groups.

Liability in Business OwnershipUnlimited liability means owners are personally responsible for all debts. Limited liability protects personal assets, as only business assets can be used to cover debts. This influences the risks owners are willing to take.

Control and Decision-MakingSole traders and partnerships often have quicker decision-making processes because fewer people are involved. In contrast, Ltds and Plcs may require approval from shareholders or boards, which can slow down decisions.

Review Time!Great work! You've learned about different types of business ownership, liability, and decision-making. Now, let's test your understanding with a few questions.