Business ownership

• What is a sole trader?

  A sole trader is a business that is owned and run by one person.
• How many owners does a sole trader business have?

  A sole trader business has only one owner.
• Can a sole trader have employees?

  Yes, a sole trader may have employees who work for them.
• What types of businesses are usually sole traders?

  Sole traders are usually start-ups or small businesses.
• What are some examples of businesses that may operate as sole traders?

  • Photographers
  • Electricians
  • Hairdressers
  • Graphic designers
  • Social media influencers
  • Bloggers
  • Small online clothing brand owners
  • Beauty therapists
• What does unlimited liability mean for a sole trader?


  Unlimited liability means the owner is personally responsible for the debts of the business.
• What type of tax does a sole trader pay on their earnings?

  A sole trader pays income tax on their earnings.
• What is one advantage of sole trading?

  It is quick and easy to set up as a sole trader.
• Why do business owners have a lot of control in sole trading?

  Because they are the sole owner of the business and its finances.
• What is a partnership in terms of ownership?

  A partnership is a type of business that has between 2 and 20 owners.
• What opportunity does sole trading provide to individuals?

  It allows individuals to be their own boss and make all business decisions.
• What types of businesses commonly use partnerships?

  Partnerships are often found in businesses that provide professional services, such as lawyers, doctors, and accountancy practices.
• What are the set-up costs like for sole trading?

  They are low.
• What is a private limited company?


  A private limited company can be a small or large business.
• How can partnerships sometimes be identified?

  Partnerships can sometimes be identified by the name of the business, such as ‘Kowalski & Davies Accountancy’.
• What does 'Ltd' signify in a business name?


  'Ltd' indicates that the business is a private limited company.
• What is a major risk associated with sole trading?

  It has the risk of unlimited liability.
• What is a deed of partnership?

  A deed of partnership is a document that outlines the rules agreed upon by the owners in a partnership.
• What is a common challenge faced by sole traders regarding work hours?

  It can involve long work hours and stressful conditions.
• What is a public limited company (PLC)?


  A business that sells shares to the public on the stock market
• Why might a plumber choose to set up as a private limited company?

  Any type of business, including a plumber, can set up as a private limited company.
• What do shareholders in a PLC represent?


  They are part owners of the business and have a voice in its operations
• Who manages and oversees the activities of a PLC?

  A chief executive officer (CEO) and board of directors
• What does it mean for a business to 'float on the stock exchange'?

  It means the business sells shares on a stock market
• What are the advantages of being a PLC?

  • Ability to raise additional finance through share capital
  • Shareholders have limited liability
  • Increased negotiation opportunities with suppliers due to economies of scale
• What are the disadvantages of being a PLC?

  • Expensive to set up, requiring a minimum cost of £50,000
  • More complex accounting and reporting requirements
  • Greater risk of a hostile takeover
  • Shareholders expect dividends from profits
  • Potential clashes among shareholders in decision-making
• What is the minimum setup cost for a PLC?

  £50,000
• What is meant by 'limited liability' for shareholders in a PLC?


  Shareholders are only liable for the company's debts up to the amount they invested
• How does being a larger business allow a PLC to negotiate better prices with suppliers?


  Larger businesses can achieve economies of scale
• What is a potential risk associated with being a PLC regarding share ownership?


  There is a greater risk of a hostile takeover by a rival company
• What do shareholders expect to receive from the profits of a PLC?

  They expect to receive dividends
• What issue may arise among shareholders when making decisions about the business?

  Shareholders may clash when making decisions
• Who are the owners of a private limited company called?


  The owners of a private limited company are known as shareholders.
• What may a deed of partnership specify?

  A deed of partnership may specify how profits are allocated, ownership percentages, roles and responsibilities, and the percentage of business debts each person pays.
• What level of responsibility does a sole trader have?

  There is a high level of responsibility for the owner.
• What is the primary aim of a not-for-profit organisation?

  To do something other than to make profit for the owners
• How does a not-for-profit organisation manage its surplus?

  Any surplus is reinvested into the business or used in other ways
• What is one example of a not-for-profit organisation?

  A charity
• What is the main purpose of charities?

  To raise money for good causes or to help people, animals, and the environment
• How are charities primarily funded?


  Mainly by donations