7.1

• Sole Traders: A business owned by a single person. They receive all the profits but are also responsible for all losses. If the business fails, their personal assets (like a house) might be used to pay debts.
• Partnerships: Businesses owned by two or more people. Partners share profits and losses. Partnerships usually have unlimited liability, meaning that if the business cannot pay its debts, the partners' personal assets may be used.
• Company: A legal entity separate from its owners (shareholders). A company can raise money by selling shares to investors. Shareholders are not personally responsible for the company’s debts, meaning they have limited liability—they can only lose the money they invested.
• Shareholders: Can earn money from two sources:

  1. Dividends: Shareholders receive a portion of the company's profits.
  2. Capital gains: Shareholders can sell their shares at a higher price than they bought them, making a profit.
• Limited Liability: In a company, shareholders cannot lose more money than they invested, protecting their personal assets.]
• Board of Directors: Companies are managed by a board of directors who report to the shareholders. If shareholders are dissatisfied, they can vote to replace the directors.