Business options 1: Business: Pearson (Edexcel): GCSE (9:1)

Trading

When a Business is operating

Company

A legal form of business either, private or public

Legal structure

The way a Business is set up and the rules that it must follow

Liability

Risk of loss, responsibility for debts

Limited Liability

The amount of debt that owners have responsibility for is only up to what they have invested (money they put into the Business)

Unlimited Liability

Owners have total responsibility for all debt, regardless of the amount of their investment (money they put into the Business)

Incorporated

A legal entity that separates assets and income from its owners and investors e.g. Private Limited Company

Unincorporated

A legal entity where assets and income belong to the owners e.g. Sole trader

Shares

Units of investment in a Business that give part ownership

Shareholders

People who own shares

Director

A person chosen by the shareholders to run the business on their behalf.

Employer

The person who hires, directs and pays staff to work for them

Employee

The person who is hired and paid to work for someone

Dividend

Money paid to shareholders every year

Bankrupt

When a Business is unable to pay its debts and has to stop trading