Unit 1.2: Business Ownership

Partnership

A business that is owned and run by between two and twenty partners.

Characteristics of a partnership

• easy to set up

• all profits (after tax) goes to partners

• unlimited liability

• requires a deed of partnership

Deed of partnership

A formal agreement setting out the legal details of a partnership.

Sleeping partner

A partner who is not involved in the day-to-day running of the business.

Unlimited liability

The partners are responsible for all of the debts incurred by a business.

Limited company

A business that is owned by shareholders and run on their behalf by directors.

Characteristics of a limited company

• has its own legal identity

• limited liability

Flotation

The process of issuing and selling shares to public investors.

Shareholder

A person who owns shares in a company.

Stakeholder

A person with an interest or concern in the activities of a business.

Stock exchange

A market in which securities are bought and sold

Not-For-Profit

A type of organisation that does not earn profits for its owners.

Sole trader

A self-employed person who owns and runs their own business

Profit

where revenue is greater than than cost

Characteristics of a not-for-profit organisation

• funded by members who do not expect a return

• objectives are cultural, religious and/or social

• typically tax-exempt charities

Characteristics of a sole trader

• name of business must not be already in use

• all profits (after tax) go to sole trader

• unlimited liability

• sole traders must pay their own income tax and NICs