1.2 - Business ownership

Keywords
1. Flotation - Occurs when a LTD becomes a PLC and has its shares listed on the stock exchange
2. Unlimited Liability - The personal possessions of the owners of a business are at risk if there are any problems; there is no limit to the amount the owners have to pay
3. Partnership - When two or more join in a business enterprise to pursue profit
4. Company - A business that has its own legal identity; it can own items, owe money, sue and be sued
5. Shareholder - A person or organisation that owns part of a company; each shareholder owns a 'share' of the business
A sole trader is a form of business that is owned and managed by one person, being a sole trader is the simplest way to start a business with little cost e.g. hairdresser or carpenter
1. Advantages
  1. Your own boss
  2. Decide things quickly
  3. easy to set up
  4. keep all profits
  5. make your own decisions
2. Disadvantages
  1. unlimited Liability
  2. may lack finance
  3. heavy workload
  4. may not have all the skills required
  5. difficult to take holiday
A partnership is created when two or more people set up in a business to pursue profit etc e.g. doctors and lawyer setting up a practice.
1. The partner ship act - contains rules about setting up a partnership
  1. Partnership
    1. Advantages
      1. Share workload
      2. more sources of finance
      3. share skills
    2. Disadvantages
      1. May disagree with each other
      2. Unlimited liability
      3. Liable for actions of other partner
2. Deed of partner ship - agreement between partners that sets out rules e.g. how profits are shared
Companies - A business with its own legal identity. A shareholder is someone who owns part of company, each one owns a 'share'. Shareholders have limited liability .
1. Advantages
  1. Limited liability
  2. Better status with customers
  3. Continues after death of founders
  4. Can bring in new investors
2. Disadvantages
  1. Have to register
  2. Have to disclose information on sales and profits
  3. Have to have accounts checked
  4. The founder doesn't have full control
Public limited companies (PLC) - Can sell shares to the general public and they can be bought on the stock exchange and prices can change depending on demand. companies tend to be big and large shareholders often want more profit meaning less money for PLC
1. Advantages
  1. generate money from advertising shares on stock exchange
  2. higher public profile
  3. shares more tempting to investors, as can be easily traded
2. Disadvantages
  1. no control over who buys shares, takeover risk
  2. lots of legal formalities e.g complying with tax regulations - expensive
  3. Owners may not have same aims as shareholders
Private limited companies (LTD) - Tends to have shareholders and shares cannot be advertised, - must be sold privately. Articles of association can restrict who shares are sold to
1. Advantages
  1. Limited Liability
  2. More customer confidence in business statements
  3. Managers can be employed to run business while shareholders profit even after founder dies
2. Disadvantages
  1. Extra legal procedures
  2. less private, financial information has to be published
  3. Investors may become shareholders, reduces control owner has
Keywords
1. Sole trader - someone who sets up a business on their own
2. Profit - The difference between the values of a business's revenue and its total costs
3. Deed of partnership - Agreement between partners that set out rules of the partnership e.g. how profits are divided.
4. Stock exchange - Market for buying and selling shares of public limited companies; a large number of shares are being bought and sold all the time
5. Stakeholders - individuals and organisations that are affect/affected by the activities of a business

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1.2 - Business ownership

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	Created by Rhianna Nicoll over 6 years ago