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?