Business ownership

• Sole Trader


  A business owned and operated by one person
• Business Ownership


  • Sole trader
  • Partnership
  • Company
• Partnership


  A business is started and owned by more than one person. Common examples of partnerships are doctors, solicitors or vets.
• Company


  A business that has its own legal identity. It can own items, owe money, sue and be sued.
• Private limited company (ltd)


  A company is formed when a business is set up to have a separate legal identity from its owners. Shareholders have limited liability.
• Public limited company (plc)


  A business that is owned by shareholders. Anyone can buy shares in the business. Shareholders have limited liability.
• Shareholder(s)


  A person or an organisation that owns part of a company. Each shareholder owns a share of the business.
• Share(s)

  The units of the business that are available for sale to investors.
• Dividend


  A portion of the after-tax profit that is paid to shareholders according to the number of shares they own
• Stock Exchange

  The market for buying and selling shares for public limited companies.
• Unlimited liability


  In the eyes of the law, there is no difference between the person running the business and the business itself. When it comes to money owed by a business, the sole trader or partners have to use their own personal funds to pay these debts, if there is not enough money in the business to do so.
• Limited liability


  Shareholders may only lose the money they have invested in the company if a business goes bankrupt, to help pay off any outstanding debts or liabilities. This means that the liability of shareholders is limited to the value of their investment into the company's shares.
• Flotation


  Occurs when a private limited company (ltd) becomes a public limited company (plc) and has its shares listed on the stock exchange.
• Not for profit organisations


  These include community and other voluntary organisations, as well as charities. They are often set up as companies or social enterprises, with any surplus money made through their activities being used to help meet the organisation's alms and objectives.
• Factors to consider when choosing the most suitable legal structure for a business

  • Size of the business
  • Type of business
  • Lender of finance requirement
  • Investment protection
  • Control
  • Growth