Forms of ownership

There are five main forms of ownership. these are 

A sole trader

Partnership

Private Limited Company

Public Limited Complany

Franchise

Non for profit organisation

In these cards you will learn about each of them alonmg with the advantages and disadvantages of each

A sole trader is an individual who may or may not employ other poeple, but who owns and operates the business and who has unlimited liability 

A sole trader must pay all their taxes. to do this they must keep all their reciepts.

An example of a Sole Trader is: a hairdresser, a photographer, a plumber

A partnership is a business owned by two or more 'partners' who work together to have a shared workload yet also a shared profits

When making a partnership a deed of partnership must be made. this will include

• How profits and loses will be shared.
• How much money each partner contributes to the business
• Working arrangements 
• Arragements for removing adding, or ending the partnership

In a Partnership and  a Sole Trader they are at risk of something called 'unlimited liablity' this means that they are at risk of losing their personnal posessions due to their business and personnal acoounts being linked. if they fall in debt, they risk their busienss and their posessions. if you cannot pay the debts you will be declaired 'Bankrupt' 

Other forms of ownerships, like Public and Private limited companies and franchise, they have limited liability where the owners are only responsible for the debts, upto the amount that they have invested into the business. their personnal and business accounts are seperate.

Private Limited Companies are also known as LTDs and have LTD at the end of their brand name to show that they are private

A LTD is owned by shareholders, which are people who have invested into the company

The complany needs to be registed with companies house and paper work is needed. They also need to publish their accounts every year

Share holders receive dividends from profits.

The business will be invested in by a set amount of shares from people they know, normally family or friends.

A Public limited company is also known as a PLC which is stated at the end of the business name 

A PLC will be owned by shareholders, who are people who have invested into the busness by buying shares that have been sold publicly on Stock Exchange and so anyone can by shares.

There is a higher amount of capital needed to become a PLC

Because they sell shares on Stock Exchange, they are at risk of something called Hostile Take over.this is when a competitor could buy all the shares and therefore controll the business.

A franchise is the 'hiring out' or liscensing the use of good ideas and businesss systems to other companies . A franchise grants the permision  to sell a product and trade under a certain name in a particular area.

Franchisee-People who use the business name

Franchisor- oeople who own the business name

A Non for profit organistation is a charity. They aim to raise money and awarness. In order to do this they generate revenues from donations.

The advantage of a charity is that you are giving back to society and the charity will receive government subsidies sich as thise working with children or the elderly.

The only disadvantage is that charities may be run by people with low skill and must be run ethically