The Public and Private Sector

• The Public Sector

  • providing a service to the public
  • the essential services
  • owned and controlled by the Government
• Examples of Public Sector

  • NHS
  • schools
  • fire service
  • police services
  • refuge collection
• The Private Sector

  • owned, financed and run by private individuals
  • range from small sole traders to large multinational businesses
  • a large number of organisations in the private sector are non-profit organisations
• The Private Sector - Unincorporated Businesses

  • no distinction in law between the individual owner and the business itself
  • sole traders and partnerships are unincorporated
• The Private Sector - Incorporated Businesses

  • have their own legal identity which is separate from the individual owners
  • these businesses can own assets, owe money and enter into contracts in their own right
  • public and private limited companies are incorporated businesses
• The Private Sector - Unlimited Liability

  • unincorporated businesses
  • unlimited liability is a situation in which the owners of a business are liable for all of the debts that a business may incur
  • sole traders and partnerships have unlimited liability
• The Private Sector - Limited Liability

  • can only lose the money you invested into the business
  • private limited companies and public limited companies have limited liability
  • liability of owners is limited
• Insolvency occurs when the liabilities of a business are greater than its assets and it is unable to meet its financial obligations
• Where this happens a business will go into liquidation, this is where a business will turn its assets into cash to pay the people the business owes money to
• The situation where the liabilities cannot be paid in full is called bankruptcy