Organisational Structures
Private Sector Businesses
- Sole Trader/Proprietor
- Partnership
- LTD
- PLC
With Sole Traders there is usually one person who directly owns the business, although they can employ other people to work for them. The person running the business is the person who controls all decision making. They get to keep all of the profit the business makes (not including any wages for staff etc.). They have unlimited liability, which means that they may lose their possessions as a result of unpaid debt. An example of this type of business might be a local building firm or somebody trading on a market stall.
A partnership can be run by any number of people between 2 to 50. They will directly own the business and will most likely employ other people. They get to keep the profit the business makes and will control all decision making. They also have unlimited liability, again meaning that the owners could lose their possessions to pay off any debts. An example of this type of business might be a local shop.
An LTD is a Private Limited Company. They are "owned" by shareholders of the business. These are usually friends or family who have gained approval from the Board of Directors to invest money into the business in exchange for a share of it. The Board of Directors usually take charge of decision-making for the business. An LTD has limited liability, meaning that the shareholders can only lose the money that they have invested in the business and they will not lose any personal possessions. An example of this type of business is Direct KBB Ltd.
A PLC is a Public Limited Company. They are again "owned" by shareholders, however the shares are sold differently to an LTD's shares. A PLC's shares are sold on the stock market and can be bought by anyone. Decisions are made by the business' Board of Directors. A PLC has unlimited liability, meaning that the shareholders will only lose the money that they have invested and not their own personal possessions. Examples of PLCs are Tesco, River Island and Poundland.