Types of Businesses Flashcards
Four types of Ownership:
Sole Trader
Partnership
Private Limited Company
Public Limited Company
Primary, Secondary and Tertiary Sector:
Primary Sector- concerned with the extraction of raw materials, for example farming.
Secondary Sector- concerned with transforming raw materials into finished goods (manufacturing) e.g. dressmaker.
Tertiary/ Service Sector- concerned with providing services such as retailing, transport and banking.
Private and Public Sector:
Private Sector Organisations- owned, financed and run by a group of individuals
Public Sector Organisations- state owned or government organisations that are operated by the government at a national, regional or local level, they are financed from taxation e.g. NHS
Unincorporated and Incorporated:
Incorporated- the business has a separate legal identity to its owners. They have been registered at Companies House and can own assets, owe money and enter contracts. (has limited liability)
Unincorporated- there is no distinction between the identity of the business and its owner so the owner has unlimited liability.
Unlimited and Limited Liability:
Unlimited Liability- the owner is liable for all the business’ debts so will have to use personal finance and possessions to pay it off.
Limited Liability- owner only loses the amount of money they invested into the business, if it goes into debt.
Sole Trader:
Owned and financed by one person e.g. hairdressers, plumber, electrician, builder.
Advantages:
Easy to set up
No legal formalities
Minimal start-up costs
Disadvantages:
Unlimited liability
Hard to raise finance
Pressure
Partnership:
More than one owner e.g. accountant, doctors, solicitors, vet.
Advantages:
Owners share responsibility
Disadvantages:
Share profits
Unlimited liability
Private Limited Company (Ltd.):
Run by a family/small group e.g. River Island, Specsavers, New Look
Advantages:
Limited liability
Reasonably private
More knowledge
Disadvantages:
Shares not sold on the stock exchange
Can be disagreements
Public Limited Company:
Owned by shareholders e.g. Pizza Express, Selfridges
Advantages:
Shares are sold on the stock market
Limited liability
Easy to raise finance
Disadvantages:
Risk of losing control