3.1.2 - Business Ownership

• What is a sole trader?

  An individual owning the business on their own
• What is a partnership?

  A business started and owned by more than one person
• What is the purpose of a partnership agreement?

  It is a legal document that shows how a partnership is run and how profits are divided up
• What are the key features of a sole trader and a partnership?

  • Sole Trader:
  • Owned by one individual
  • Partnership:
  • Owned by more than one person
  • Requires a partnership agreement
• Who can private limited companies raise funds from?

  People they know for example, friends and family
• Why can't private limited companies raise funds from the general public?

  Because their shares are not listed on the stock exchange
• Can you name some well-known retail private limited companies?

  River Island, Wilkinson, and Clarks
• What are the key characteristics of private limited companies (Ltd)?

  • Can raise funds from known investors (friends and family)
  • Cannot raise funds from the general public
  • Shares are not listed on the stock exchange
• What type of companies are most of the largest businesses in a country?

  Public limited companies (plc)
• Can you name some famous public limited companies in the UK?

  BP, M&S, Tesco, and Barclays
• Why are public limited companies complicated and expensive to set up?

  Due to regulatory requirements and the need for extensive documentation
• How can public limited companies raise large sums of money?

  By listing their shares on the stock exchange
• What is a potential risk of trading shares in a public limited company?

  The company can become vulnerable to a possible takeover
• What could happen to the original owners or shareholders if they hold less than 50% of the shares?

  They could lose control of the company
• What are the key characteristics of public limited companies (plc)?

  • Most of the largest businesses in a country
  • Can raise large sums of money through stock exchange
  • Complicated and expensive to set up
  • Vulnerable to takeovers if shareholders hold less than 50% of shares
• Unlimited liability definition

  The owners of a business are personally responsible for all of the business's debts, without limit.
• Limited liability definition

  A legal structure where shareholders are legally responsible for their company's debts only up to the value of their shares
• Unincorporated definition

  Not a company
• Incorporated

  A company
• True or false: Partners ate not legally responsible for what the other partners do?

  False
• True or false: setting up a business as a sole trader can be quite complicated?

  False
• True of false: Public limited companies can choose who they have as shareholders

  False
• What is is called when you put shares on the stock exchange for the first time?

  Floating
• What is a silent or sleeping partner in a partnership?

  A partner who invests money but doesn't participate in running the business.
• What is the primary role of a silent partner?

  To invest money into the partnership without involvement in management.
• What does "not for profit" mean in a business context?

  A business that exists for a purpose other than making a profit.
• What are the characteristics of a silent partner?

  • Invests money into the partnership
  • Does not participate in business management
  • Does not make decisions for the business
• What are the purposes of a "not for profit" business?

  • Serve a social cause
  • Provide community services
  • Support educational initiatives