Understanding Business Structures and Their Impacts

Business Structure

Legal framework defining ownership and operations.

Private Sector

Owned by individuals or groups, not government.

Public Sector

Owned and controlled by the government.

Sole Trader

Individual owner running their own business.

Partnership

Business owned by two or more individuals.

Private Limited Company

Company owned by private shareholders, limited liability.

Public Limited Company

Company offering shares to the public, limited liability.

Unlimited Liability

Owners responsible for all business debts personally.

Limited Liability

Owners' financial responsibility limited to their investment.

Not-for-Profit Organisation

Entity focused on social goals, not profit.

Social Enterprise

Business aiming for social impact alongside profit.

Charity

Non-profit organization helping those in need.

Co-operative

Business owned and operated by a group for mutual benefit.

Merit Good

Service beneficial to society, underprovided by market.

Public Services

Essential services provided for the good of society.

Business Objectives

Goals such as profit, growth, and survival.

Profit

Revenue exceeding total costs; Profit = SR - TC.

Growth

Increase in size or sales volume of a business.

Survival

Continuing to operate, especially for startups.

Essential Services

Services like education and healthcare provided by public sector.

Stakeholders

Individuals or groups affected by business operations.

Evaluation of Structures

Assessing advantages and disadvantages of business forms.

Profits

Earnings remaining after all expenses are deducted.

Debt

Money owed by a business to creditors.

Sole Trader

Individual running a business alone, bearing all risks.

Unlimited Liability

Personal responsibility for all business debts.

Self Assessment Tax Return

Annual tax declaration to HMRC by individuals.

Assets

Resources owned by a business with economic value.

Income Tax

Tax levied on profits of sole traders.

Motivation

High drive for success in sole traders.

Partnership

Business arrangement between two or more individuals.

Sleeping Partner

Investor in a partnership without active management.

Limited Companies

Separate legal entities from their owners.

Shareholders

Owners of a limited company holding shares.

Limited Liability

Protection from being responsible for company debts.

Incorporation

Process of registering a company as a legal entity.

Memorandum of Association

Document stating company name and purpose.

Articles of Association

Rules governing the management of a company.

Form 10

Details of directors and company secretary submitted.

Form 12

Declaration of compliance with company law.

Private Limited Companies

Companies with limited share transferability, owned by known shareholders.

Public Limited Companies

Companies that can sell shares publicly on stock exchanges.

Financial Records

Documents detailing a company's financial transactions.

Annual Return

Yearly report submitted to Companies House detailing company information.

Public Limited Company

Company selling shares publicly on stock exchange.

Private Limited Company

Company shares not available to the public.

Limited Liability

Owners' personal assets protected from business debts.

Separate Legal Identity

Company distinct from its owners legally.

Hostile Takeover

Acquisition of company against management's wishes.

Financial Privacy

Limited disclosure of financial records to public.

Shareholder Voting Rights

Shareholders can influence company decisions.

Social Enterprise

Business prioritizing social objectives over profit.

Charity

Organization supporting specific societal causes.

Society

Group with common interests, formal or informal.

Cooperative

Member-owned organization for mutual benefit.

Administrative Costs

Ongoing expenses related to company management.

Capital Raising

Process of obtaining funds for business activities.

Legal Requirements

Regulations governing company formation and operation.

Public Scrutiny

Increased public examination of company operations.

Nature of Business

Type of business influencing legal structure choice.

Equity Sharing

Distribution of ownership among partners or shareholders.

Surplus Reinvestment

Profits reinvested for social objectives, not shareholders.

Registered Charity

Charity recognized by government for tax benefits.

Cultural Society

Group focused on cultural interests or activities.

Political Society

Group organized around political interests or goals.

Research Funding

Financial support for scientific or social research.

Legal Structure

Framework defining business ownership and liability.

Stakeholders

Individuals or groups affected by business decisions.

Private Sector

Businesses owned by individuals or groups.

Public Sector

Government-run services for public benefit.

Public Goods

Goods not provided in a free market.

Non-rivalry

One person's use doesn't reduce availability for others.

Non-excludability

Cannot prevent others from benefiting from use.

Merit Goods

Under-consumed goods that require government provision.

Survival

Primary aim for businesses to continue operating.

Profit Maximisation

Goal to achieve highest possible profit.

Market Share

Percentage of total sales in a market.

Public Sector Aims

Provide universal services regardless of location.

Private Sector Aims

Focus on profit, growth, and market share.

Unlimited Liability

Owners responsible for all business debts.

Limited Liability

Owners' financial responsibility limited to investment.

Sole Trader

Individual running a business alone.

Private Limited Company

Ownership restricted to shareholders, limited liability.

Public Limited Company

Shares traded publicly, limited liability.

Not-for-Profit Organisations

Entities focused on social goals, not profit.

Consumer Goods

Products used directly by consumers.

Producer Goods

Items used to produce other goods.

Durable Goods

Items used repeatedly over time.

Single Use Goods

Items intended for one-time use.

Trading Surplus

Excess of revenue over expenses in trading.

Merit Goods

Goods provided to improve society's living standards.

Public Sector Importance

Ensures provision of essential public goods.

Public Goods

Services available to all without direct payment.

Sole Trader

Business owned and operated by one individual.

Partnership

Business owned by 2-20 individuals.

Financial Reward

Opportunity to earn more than current employment.

Deed of Partnership

Legal agreement outlining partners' rights and responsibilities.

Capital Contribution

Amount each partner invests in the business.

Profit Sharing

Distribution of profits among business partners.

Independence in Business

Control over decisions and operations of the business.