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Business Ownership

Year 11. Business Ownership. Learning Objective: To learn about the different types of Business ownership. Learning Outcome: To know and identify the different types of business ownership and the different ways they work.

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Business Ownership

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  1. Year 11 Business Ownership Learning Objective: To learn about the different types of Business ownership Learning Outcome: To know and identify the different types of business ownership and the different ways they work

  2. A business owned by one person. Sometimes other employees are taken on to work for the business but they don’t own any of it. • They take all the profits • They have unlimited liability (liable for all debts) • Examples: small businesses areas such as plumbing, carpentry, retailing.

  3. Partnerships • Ordinary partnerships have 2-20 people owning the business. Examples are legal services, surveying, IT. • They sometimes sign a deed of partnership – shows how business will be run and profit shared. If no deed – profits shared equally. • Partners in ‘Ordinary Partnerships’ have unlimited liability, however there are 2 other types of business partnership where they can have ‘limited liability’ – these can have more than 20 partners. They are: Limited partnerships & Limited Liability partnerships

  4. Partnerships • Limited partnerships – some partners can invest money into the business but not actively involved in its running they are also known as ‘sleeping partners’ – they have Limited liability • Limited Liability partnerships – all partners in these have limited liabilty. • They normally have unlimited liability, however there are 2 other types of partnership where they can have ‘limited liability’ – these partnerships can have more than 20 partners. They are: Limited partnerships & Limited Liability partnerships

  5. Task: Advantages & Disadvantages • Group work, A&B =sole traders,C&D =partnership. • Create a table Sole Traders Partnerships 3. See if you can be the team that can think of the most advantages and disadvantages for each ownership Hints words: setting up, control, profits, risk, workload, responsibilities, skills, financial resources, liability, illness, working hours, expansion, loans, disagreements, resignation.

  6. Part 2 – Limited CompaniesOwnership & Control • Limited companies are owned by shareholders. They own shares in the company. £200m business – 200m shares = £1 • All shareholders have limited liability. • Each shareholder has some control of the business, they vote annually for Directors at AGM’s • Directors decide on company policy and managers to run it day to day (Directors and Managers can also be shareholders)

  7. Limited CompaniesSetting Up. • The REGISTRAR OF COMPANIES at Companies House – all limited companies must be registered here. They must have: • A MEMORANDUM OF ASSOCIATION – giving the name, address, activity and shares of the co. • ARTICLES OF ASSOCIATION – details of the voting rights of the shareholders, how profits will be shared and what the directors do. They will then receive A CERTIFICATE OF INCORPORATION which allows them to start trading Each year the company must send a copy of its accounts to Companies House, these can be inspected by anyone!

  8. Certificate of Incorporation MemorandumofAssociation

  9. Profits Profits can either be retained for future use or distributed to shareholders in ‘dividends’ Advantage and Disadvantage of Limited Companies

  10. Private & Public Limited Companies * - where the shares of public limited companies are traded.

  11. Q&A – Round 1 • List 3 types of businesses where sole traders are likely to be found • Complete the sentence... Partners may sign a ___ of _________ which shows how profits will be shared 3. Choose the correct answer a,b,c or d The number of partners in an ordinary partnership can be: • 1-10 b) 20-200 c) 1-20 d) 2-20 4. True or False: • Unlimited Liability means that the owners of the business are liable for all the debts of the business • Sole Traders do not have unlimited liabilty

  12. Q&A – Round 2 • How do the following examples illustrate the problems of sole traders: • A) Johnsons Partnership has decided to buy a new office building but the owners cannot agree where it should be • B) Lee Healy, a plumber has been off sick for 3 days and has lost £500 worth of work • C) Karrick, a decorating business, has just lost a job painting a factory because the job was too big for the owner. She did not have enough money in the business to hire the equipment she needed to do the work.

  13. Q&A – Round 3 • A Plc is also known as a ................. • Choose the correct answer a,b,c or d. A Public Limited Company must have at least the following value in shares before it can start up: • £50,000. b) £5,000 c) £5. d) £125,000 3. True or False: By law a private limited company must be registered with the registrar of companies 4. State which of the following are Public Limited Companies and which are Private Limited Companies: • Alliance and Leicester plc. • McNulty and Sons Ltd. • Mars Ltd. • British American Tobacco plc. • True or False: The shares of a private limited company are traded openly on a stock exchange 6. State two disadvantages of a limited company

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