TYPES OF BUSINESS OWNERSHIP UNIT 1 TYPES OF

TYPES OF BUSINESS OWNERSHIP UNIT 1 TYPES OF BUSINESS OWNERSHIP Types of business ownership

TYPES OF BUSINESS OWNERSHIP There are two main sectors of business in the UK: • public • private Public sector organisations are run by the government for people, e. g. the Inland Revenue or NHS. Private sector organisations are run for profit or not-for-profit purposes.

TYPES OF BUSINESS OWNERSHIP Profit-making organisations are divided into four main types: • • sole trader partnership company franchise

TYPES OF BUSINESS OWNERSHIP Sole trader: the most common form of business ownership: • owned by one person but may employ a number of people • unlimited liability

TYPES OF BUSINESS OWNERSHIP Partnership: Business associations with two or more members, usually up to 20: • unlimited liability for the partners, unless limited liability status is written into the partnership as a result of the Partnerships Act 2002 • often used by professional people, e. g. accountants or solicitors

TYPES OF BUSINESS OWNERSHIP Companies are divided into two types: • public limited company, known as PLC • private limited company known as LTD

TYPES OF BUSINESS OWNERSHIP PLC • Public limited companies issue shares that can be bought by the public. • Shares are traded on the stock exchange and shareholders are entitled to a share of the profits, called a dividend. • Limited liability means that the shareholders are liable only for the amount of money they invest in a business.

TYPES OF BUSINESS OWNERSHIP LTD • Private limited companies issue shares to private investors with the permission of the board of directors. • Limited liability means that the shareholders are liable only for the amount of money invested in the business.

TYPES OF BUSINESS OWNERSHIP Franchise • A franchise is not a form of business ownership but a ‘business marriage’ between a proven business (franchisor) and a person wishing to run a business with support (franchisee). • The franchisee buys the permission to run the business from the franchisor. • The franchisee will have a form of business ownership such as sole trader, partnership or limited company.

TYPES OF BUSINESS OWNERSHIP Not-for-profit organisations • aim to provide a service rather than make a profit – many are charities • new laws require charities to meet one of a number of objectives in order to qualify for their status, such as: – prevention and relief of poverty (e. g. Oxfam) – advancement of religion (e. g. Church of England) – advancement of education (e. g. The British Dyslexia Association)