BTEC National

UNIT 1 TYPES OF BUSINESS OWNERSHIP

UNIT 1
TYPES OF BUSINESS OWNERSHIP

Types of business
ownership
 BTEC National
UNIT 1 TYPES OF BUSINESS OWNERSHIP

There are two main sectors of business in the UK:

• public
• private
Public sector organisations are run by the
government for people, e.g. the Inland Revenue or
NHS.
Private sector organisations are run for profit or
not-for-profit purposes.
 BTEC National
UNIT 1 TYPES OF BUSINESS OWNERSHIP

Profit-making organisations are divided into

four main types:
• sole trader
• partnership
• company
• franchise
 BTEC National
UNIT 1 TYPES OF BUSINESS OWNERSHIP

Sole trader: the most common form of

business ownership:
• owned by one person but may employ a
number of people
• unlimited liability
 BTEC National
UNIT 1 TYPES OF BUSINESS OWNERSHIP

Partnership: Business associations with

two or more members, usually up to 20:
• unlimited liability for the partners, unless
limited liability status is written into the
partnership as a result of the Partnerships
Act 2002
• often used by professional people, e.g.
accountants or solicitors
 BTEC National
UNIT 1 TYPES OF BUSINESS OWNERSHIP

Companies are divided into two types:

• public limited company, known as PLC
• private limited company known as LTD
 BTEC National
UNIT 1 TYPES OF BUSINESS OWNERSHIP

PLC
• Public limited companies issue shares that can
be bought by the public.
• Shares are traded on the stock exchange and
shareholders are entitled to a share of the
profits, called a dividend.
• Limited liability means that the shareholders are
liable only for the amount of money they invest
in a business.
 BTEC National
UNIT 1 TYPES OF BUSINESS OWNERSHIP

LTD
• Private limited companies issue shares to
private investors with the permission of the
board of directors.
• Limited liability means that the shareholders are
liable only for the amount of money invested in
the business.
 BTEC National
UNIT 1 TYPES OF BUSINESS OWNERSHIP

Franchise
• A franchise is not a form of business ownership
but a ‘business marriage’ between a proven
business (franchisor) and a person wishing to run
a business with support (franchisee).
• The franchisee buys the permission to run the
business from the franchisor.
• The franchisee will have a form of business
ownership such as sole trader, partnership or
limited company.
 BTEC National
UNIT 1 TYPES OF BUSINESS OWNERSHIP

Not-for-profit organisations
• aim to provide a service rather than make a
profit – many are charities
• new laws require charities to meet one of a
number of objectives in order to qualify for their
status, such as:
– prevention and relief of poverty (e.g. Oxfam)
– advancement of religion (e.g. Church of England)
– advancement of education (e.g. The British Dyslexia
Association)