Business Ownership

Question 1

Unlimited Liability

Answer 1

The sole trader or partner is personally
liable for any debts that the business incurs. If the business
takes out a loan or buys goods and services on credit, then the
sole trader himself/herself is liable to repay the debt from
personal assets.

Question 2

Limited liability

Answer 2

means that the investors can only lose the
money they have invested and no more. This encourages people
to finance the company, and/or set up such a business, knowing
that they can only lose what they put in, if the company fails.

Question 3

Sole traders

Answer 3

A sole trader describes any business that is owned and
controlled by one person - although they may employ workers.
Individuals who provide a specialist service like plumbers,
hairdressers or photographers are often sole traders

Question 4

Partnerships

Answer 4

Partnerships are businesses owned by two or more people, up
to 20. Doctors, dentists and solicitors are typical examples of
professionals who may go into partnership together and can
benefit from shared expertise.

Question 5

Limited companies

Answer 5

A limited company has special status in the eyes of the law.
These types of company are incorporated, which means they
have their own legal identity and can sue or own assets in their
own right.
• The ownership of a limited company is divided up into equal
parts called shares. Whoever owns one or more of these is
called a shareholder

Question 6

A private limited company (ltd)

Answer 6

often a small business such
as an independent retailer in a market town. Shares do not
trade on the stock exchange.

Question 7

A public limited company (plc)

Answer 7

usually a large, well-known
business. This could be a manufacturer or a chain of retailers
with branches in most city centres. Shares trade on the stock
exchange.