AQA Business Unit 1 Ch 7,8,9,10.

The defininitions you need to know...

Unincorporated business: there is no distinction in law between the individual owner and the business itself. Such businesses include sole traders and partnerships.

Incorporated business: this has a legal identity that is separate from the individual owners. Such businesses include private limited companies and public limited companies.

Unlimited liability: a situation in which the owners of a business are liable for all the debts that the business may incur.

Limited liability: a situation in which the liability of the owners of a business is limited to the fully paid-up value of the share capital.

Ownership: providing finance and therefore taking risks.

Control: managing the organisation and making decisions.

Stakeholders: any groups of individuals with an interest in a business. This includes employess and shareholders.

Conclusion

A number of factors affect the choice of legal structure. These include

• The need for finance to expand
• The size of the business
• The level of risk involved