Learn: Ownership

Welcome!Today, we’ll explore ownership in business. This is an important topic as it helps us understand how businesses are structured and who has control over them. Let’s get started!

What is Ownership?Ownership refers to who legally owns and controls a business. It determines how decisions are made, who takes profits, and who is responsible for debts. The type of ownership affects how businesses operate and grow.

Types of Business OwnershipBusinesses can have different types of ownership. Each type has unique features, advantages, and disadvantages. Let’s look at the main types of ownership:

Sole TraderA sole trader is a business owned and run by one person. They have full control but also unlimited liability (they are responsible for all debts). This is common for small businesses like hairdressers or local shops.

PartnershipA partnership is owned by 2-20 people who share responsibility, profits, and decision-making. Partnerships often have a deed of partnership, which is a legal agreement outlining rules like how profits are shared. Examples include law firms and accountancy practices.

Private Limited Company (Ltd)A private limited company (Ltd) is owned by shareholders, but shares cannot be sold to the public. Shareholders benefit from limited liability, meaning they only lose what they invest. Examples include small family businesses.

Public Limited Company (Plc)A public limited company (Plc) is also owned by shareholders, but its shares can be sold to the public on the stock exchange. This allows it to raise large amounts of capital, but decision-making can become more complex. Examples include Tesco and BP.

Not-for-Profit OrganisationsNot-for-profit organisations are set up to help a cause rather than to make a profit. Any surplus money is reinvested into their goals. Examples include charities and social enterprises.

Review Time!Great work! You’ve learned about different types of ownership, including sole traders, partnerships, Ltds, Plcs, and not-for-profits. Let’s check your understanding with a few final questions.