Sole TraderIs a sole trader the largest or smallest type ofbusiness? How many owners does it have? A sole trader is the smallest type of business. It is
owned by one person, even though there may be a number of employees.
Who is responsible for the business? A sole trader is personally responsible for every
aspect of the business. Does a sole trader pay taxes? After paying tax, the sole trader can keep all of the
profit.When do you normally see a sole trader? The small shops you see on the way to school are
probably sole traders.
PartnershipsHow many people can own a partnership? A Partnership is owned and run by 2 – 20
people. The partners are usually jointly responsible for running the business.
Give an example of a partnership Common examples of partnerships are:
restaurant, solicitors and vets.
What document generally gets drawn -up Deed of partnership
Private Limited Company
How do you know if a company is a private limited company?
It has Ltd after its name.
Do Ltds have limited or unlimited liability? An Ltd has limited liability.
Shares are issued in return for what? Money. To allow the owners to raise capital.
Private Limited Company cont…Disadvantages Some financial information has to be
available for the public to see Details of the company has to be
submitted to the Registrar of Companies which is timely and costly.
Ltds cannot offer shares for sale to the general public.
Shareholders expect a dividend
Public Limited CompanyIs this the smallest type of company?A public Limited Company or PLC is the largest type of
company or business. Who runs the business? People, called directors are paid to manage and run
the company. Where are the shares sold? The business is divided up into shares and sold on
the stock market. How does the business raise money? Businesses can raise a lot of money by selling
shares. They do this so that they can expand and grow.
PLCs cont… Shares
Shareholders Private individuals usually only own a small percentage.
These are know as Minority Shareholders. Major Shareholders like banks and investment companies
will own a larger number of shares
What make shares increase in value? The prospects of the business are good Possibility of take over Economy is doing well Asset value of the business has increased
The can also fall for the opposite reasons.
Evaluation point
Use your knowledge and understanding to be able to discuss
Whether a business should change from a Ltd to a Plc.
Why so many large companies choose to become a Plc.
Some Plcs return to be Ltds why is this?
Did you come up with any of the following? Ability to raise large sums of money Relative ease to raise money from additional
sources Complicated and expensive to set up a PLC Public is allowed to see company accounts Shareholders expect dividends Company can be taken over
Franchises Franchises are businesses that already exist,
but you can buy into an already successful business such as MacDonald’s or Body Shop.
The person buying into the business or ‘franchisee’ has to pay the existing business owner or ‘franchisor’ a regular share of the profit and they have to pay a one off fee to be able to use the existing business name. In return the franchisee gets support to run the franchise.
Franchises cont…
http://www.franchiseexpo.co.uk/Burger-King-Fast-Food-Franchise.cfm
Multinationals
Multinational companies are usually very large companies around the world that may have a head office based in one country but manufacturing or service facilities in other countries.
Task - explain
What is a multinational company? List 2 advantages and 2 disadvantages of
multinational companies Many multinational companies trade under
different names. Why do you think this is?