Business Ownership Types

Question 1

What organisations are classed as a public sector?

Answer 1

Are owned by local, regional or national government. They provide services on behalf of the government, funded by taxpayers money.

Question 2

What organisations are classed as a private sector?

Answer 2

Are owned by private individuals or companies. The private sector is made up of sole traders, partnerships and limited companies.

Question 3

What organisations are classed as a voluntary sector?

Answer 3

Non-profit and non- governmental organisations e.g. charities/blue cross.

Question 4

What are sole traders?

Answer 4

Where the business is owned by just one person. The owner runs the business, can raise money via bank loans, and may employ any number of people to help.
- The business can trade under the owners name- as long as the name is not registered by someone else.

Question 5

What are the advantages of being a sole trader?

Answer 5

Easy to set up- the owner has to register as self employed with HMRC does not have to pay registration fees.
- has to make an annual self assessment tax return- account and records are quite straightforward
- the owner is in control and is free to make decisions.
- any profit made after tax is kept by owner

Question 6

What are the disadvantages of a sole trader?

Answer 6

• unlimited liability for debts
• Risky if business needs a lot of investment
• owners have to use or obtain their own money
• have to make all the decisions

Question 7

What is a partnership?

Answer 7

Two or more own the business and share the risk and workload.
- draw up a feed of partnership
If no deed is drawn up then the arrangements would be subject to the partnership Act 1894- all profits are distributed equally.