Classify the business according to its ownership, and explain the benefits and constraints of this type of ownership.
Classify the business according to its ownership, and explain
the benefits and constraints of this type of ownership.
British airways is a Plc (Public Limited Company), which is incorporated, other types of business are Ltd (Private Limited Company), which is also incorporated.
There is also unincorporated business, which are a sole traders and partnerships.
Unincorporated businesses: An unincorporated business has unlimited liability and the owners are the business, Which means in law an unincorporated business is libel for all of its debts and is personally responsible for repaying those debts.
Sole traders: A sole trader is an individual trading in his or her name, or under a suitable trading name. Advantages are: You are your own boss which gives you freedom, there are no legal formalities required before you can start which makes it simple, there is less form filling and there are no legal costs i.e. drawing up partnership agreements. Disadvantages are: High risk as you are on your own and no one to share responsibilities of running the business or to take over when you are ill or on holiday, its time consuming as you may have to work long hours to keep up or meet deadlines, you need to have a high level of expertise as you need to deal with things like finance and it may be hard to raise capital. Some examples of Sole traders are: Small trades people, corner shops, freelance writers, artists and journalists.
