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

2. 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.

3. Profit-making organisations are divided into four main types:
sole trader
partnership
company
franchise

4. Sole trader: the most common form of business ownership:
owned by one person but may employ a number of people
unlimited liability

5. 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

6. Companies are divided into two types:
public limited company, known as PLC
private limited company known as LTD

7. 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.

8. 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.

9. 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.

10. 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)