Types of Business Organisation

Types of Business Organisation

Sole Trader and Partnerships

• A sole trader is a business that is owned and run by one person. They have unlimited liability, meaning all personal assets can be used to pay off their business debts.
• A partnership is a business formed by two or more people, who share the costs, profits and the running of the business. Like sole traders, partners have unlimited liability.

Limited Companies

• A private limited company (Ltd) is a separate legal entity to the owner. Shares can only be sold privately, often to family and friends. Shareholders have limited liability, they are only liable for the amount they have invested.
• A public limited company (PLC) also has limited liability and is a separate legal entity but, unlike Ltd companies, their shares can be traded on the stock exchange.

Multinational Corporations

• Multinational corporations (MNCs) operate in more than one country. They can transfer goods and resources across borders and can also benefit from economies of scale.

Cooperatives

• A cooperative is a business owned and run by its members. Members can be employees and/or customers. Profits are shared among the members.

Franchises

• Franchises are how many businesses expand. A franchisee buys the right to use the proven business idea, name and logo of a franchisor, and pays them a regular fee or a share of the profits.

Non-profit organisations

• Non-profit organisations reinvest any money they make back into the organisation rather than distributing it among employees or shareholders.

Local, National, and International

• Local businesses operate in a small geographic area, such as a town.
• National businesses operate across an entire country.
• International businesses, like MNCs, operate across multiple countries.