Unit 1: Task 2

Neva Morrison

Task 2

Types of business

There are a variety of different business types, they all run differently, with separate business models, employee structures and liabilities.  

Sole traders

This is where the business is run by one person, it is easy to set up, has flexibility and control for the owner and they can keep all profits from the business. However, this also makes them unlimitedly liable and have the pressure of being solely responsible and there is also a lack of continuity for the business and it may not continue past the death of the original 

Types of business

There are a variety of different business types, they all run differently, with separate business models, employee structures and liabilities.  

Sole traders

This is where the business is run by one person, it is easy to set up, has flexibility and control for the owner and they can keep all profits from the business. However, this also makes them unlimitedly liable and have the pressure of being solely responsible and there is also a lack of continuity for the business and it may not continue past the death of the original owner.

Limited companies

A limited company refers to a business in which those who funded the company are only responsible for the amount they have invested in the business and are not held completely liable for any business losses.

Partnerships

This is when a business’s owners have unlimited liability so are personally reliable for debts, the business partnership is between 2 to 20 people. They are easy to set up and accounts don’t need to be published.

Social enterprises

A social enterprise is a business that aims to help its community and aid social change by reinvesting in its business or donating to the local community. Social enterprises also help the community by increasing the economy and generating more employment through training and employment opportunities in their local area.

Charities

A charity organisation is one set up for a specific purpose, this purpose should be to help or benefit the community in some way. There are rules surrounding charities such as establishing how they aim to provide public benefit. If granted charitable status, the charity can become tax and VAT exempt.

Unincorporated associations

An unincorporated association is an organisation set up by a group of people that is not started to make a profit, this includes volunteer groups and sports clubs. There are no costs required to set up an unincorporated association and is usually created through a written agreement of the group involved. The individual members are responsible for their obligations and any related debts.

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