Which legal structures give owners limited liability?

Private limited companies and public limited companies give owners limited liability. Sole traders and ordinary partnerships have unlimited liability.

What are the benefits of being a sole trader?

A sole trader is easy and cheap to set up and keeps all the profit. The owner has full control over decisions.

What are the drawbacks of being a sole trader?

A sole trader has unlimited liability and may find it hard to raise finance. The owner often works long hours with no one to share the load.

AQA GCSE Business 8132

Business in the Real World

Topic overview What a business is and why people start one Goods, services, needs, wants and factors of production Business sectors, entrepreneurs and a changing business environment Sole traders, partnerships, limited companies and not-for-profit organisations Business aims and objectives Why business objectives differ and change Stakeholders and their influence on businesses Factors affecting business location Business planning and basic financial terms Expanding a business and economies of scale

Influences on Business

Topic overview E-commerce and digital communication Ethics, the environment and sustainability Interest rates, employment and consumer spending Globalisation and exchange rates Employment, health and safety and consumer law Competition, risk and uncertainty

Business Operations

Topic overview Job, flow and lean production Managing stock: just in time and just in case Suppliers, procurement, logistics and supply chains Quality control, quality assurance and TQM Customer service and the sales process

Human Resources

Topic overview Organisational structures, span of control and delegation Recruitment, selection and contracts of employment Financial and non-financial methods of motivation Induction, on-the-job and off-the-job training

Marketing

Topic overview Identifying and satisfying customer needs Market segmentation Purpose of market research and primary and secondary research Market research methods and interpreting findings Pricing methods and factors affecting price New products, USP, brand image and the Boston Matrix Product life cycle and extension strategies Promotional methods and the promotional mix Channels of distribution, e-commerce and m-commerce The integrated marketing mix

Finance

Topic overview Sources of finance Cash flow and cash flow forecasts Financial calculations and average rate of return Break-even charts and margin of safety Income statements and statements of financial position Profit margins and judging financial performance

Business in the Real World

Sole traders, partnerships, limited companies and not-for-profit organisations

3 things to know
Both papers

Overview

Sole traders, partnerships, private and public limited companies and not-for-profit organisations, limited against unlimited liability, how profit is shared, and choosing the right structure for a business.

What you need to know

Answer each one before you reveal it.

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Key term

What is a sole trader?

Key term

What is unlimited liability?

Key term

What is limited liability?

Questions from this subtopic

Each one with the model answer underneath.

1
What is a sole trader?
Model answer
A sole trader is a business owned and run by one person. The owner keeps all the profit but has unlimited liability.
2
What is unlimited liability?
Model answer
Unlimited liability means the owners are personally responsible for all the business's debts. The owners could lose personal possessions such as their house.
3
What is limited liability?
Model answer
Limited liability means shareholders can lose only the money they invested in the business. Their personal possessions are protected.
4
Which legal structures give owners limited liability?
Model answer
Private limited companies and public limited companies give owners limited liability. Sole traders and ordinary partnerships have unlimited liability.
5
What are the benefits of being a sole trader?
Model answer
A sole trader is easy and cheap to set up and keeps all the profit. The owner has full control over decisions.
6
What are the drawbacks of being a sole trader?
Model answer
A sole trader has unlimited liability and may find it hard to raise finance. The owner often works long hours with no one to share the load.

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Business in the Real World

Influences on Business

Business Operations

Human Resources

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The pays a fee and a share of revenue.

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AThe business pays more interest on the money it owes.

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