types business organisations
Overview
This lesson explores the various legal structures businesses can adopt, from sole traders to multinational corporations. Understanding these organisational types is crucial for evaluating their characteristics, advantages, and disadvantages in different business contexts. We will examine how these structures impact liability, control, and access to capital.
Sole Traders and Partnerships
### Sole Traders * **Definition:** A business owned and controlled by one individual. The owner provides the capital, makes all decisions, and takes all profits. * **Advantages:** * **Easy to set up:** Minimal legal formalities, low start-up costs. * **Full control:** The owner makes...
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Key Concepts
- Sole Trader: A business owned and controlled by one person, who is personally liable for all business debts.
- Partnership: A business owned and controlled by two or more individuals who share profits and losses, typically with unlimited liability.
- Private Limited Company (Ltd): A company whose shares are not offered to the general public, typically owned by a small group of shareholders, with limited liability.
- Public Limited Company (PLC): A company whose shares can be bought and sold by the general public on a stock exchange, with limited liability.
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Exam Tips
- →When comparing different business types, always use a consistent set of criteria (e.g., liability, control, capital, ease of setup) to ensure a balanced and comprehensive answer.
- →For 'discuss' or 'evaluate' questions, ensure you present both advantages and disadvantages for each business type, and conclude with a reasoned judgment based on a given scenario.
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