Sole Trader Is a sole trader the largest

Sole Trader Is a sole trader the largest or smallest type of business? How many owners does it have? n A sole trader is the smallest type of business. It is owned by one person, even though there may be a number of employees. Who is responsible for the business? n A sole trader is personally responsible for every aspect of the business. Does a sole trader pay taxes? n After paying tax, the sole trader can keep all of the profit. When do you normally see a sole trader? n The small shops you see on the way to school are probably sole traders.

Partnerships How many people can own a partnership? n A Partnership is owned and run by 2 – 20 people. The partners are usually jointly responsible for running the business. Give an example of a partnership n Common examples of partnerships are: restaurant, solicitors and vets. What document generally gets drawn -up n Deed of partnership

Private Limited Company How do you know if a company is a private limited company? n It has Ltd after its name. Do Ltds have limited or unlimited liability? n An Ltd has limited liability. Shares are issued in return for what? n Money. To allow the owners to raise capital.

Private Limited Company cont… Disadvantages n Some financial information has to be available for the public to see n Details of the company has to be submitted to the Registrar of Companies which is timely and costly. n Ltds cannot offer shares for sale to the general public. n Shareholders expect a dividend

Public Limited Company Is this the smallest type of company? A public Limited Company or PLC is the largest type of company or business. Who runs the business? n People, called directors are paid to manage and run the company. Where are the shares sold? n The business is divided up into shares and sold on the stock market. How does the business raise money? n Businesses can raise a lot of money by selling shares. They do this so that they can expand grow.

PLCs cont… Shares Shareholders n Private individuals usually only own a small percentage. These are know as Minority Shareholders. n Major Shareholders like banks and investment companies will own a larger number of shares What make shares increase in value? n The prospects of the business are good n Possibility of take over n Economy is doing well n Asset value of the business has increased The can also fall for the opposite reasons.

Evaluation point Use your knowledge and understanding to be able to discuss Whether a business should change from a Ltd to a Plc. n Why so many large companies choose to become a Plc. n Some Plcs return to be Ltds why is this? n

Did you come up with any of the following? n n n Ability to raise large sums of money Relative ease to raise money from additional sources Complicated and expensive to set up a PLC Public is allowed to see company accounts Shareholders expect dividends Company can be taken over

Franchises n Franchises are businesses that already exist, but you can buy into an already successful business such as Mac. Donald’s or Body Shop. n The person buying into the business or ‘franchisee’ has to pay the existing business owner or ‘franchisor’ a regular share of the profit and they have to pay a one off fee to be able to use the existing business name. In return the franchisee gets support to run the franchise.

Franchises cont… http: //www. franchiseexpo. co. uk/Burger-King-Fast-Food-Franchise. cfm

Multinationals n Multinational companies are usually very large companies around the world that may have a head office based in one country but manufacturing or service facilities in other countries.

Task - explain What is a multinational company? n List 2 advantages and 2 disadvantages of multinational companies n Many multinational companies trade under different names. Why do you think this is? n