Business types and structures

Business Types

Sole Trader: A business owned and run by one person who has unlimited liability for any debt.
Partnerships: Two or more people sharing ownership of a business. Liability and profits are shared among partners.
Limited Liability Partnership (LLP): A type of partnership where each partner has limited liability.
Private Limited Company (Ltd): Business structure where owners have limited liability and shares are not available to the general public.
Public Limited Company (Plc): A Company with limited liability but its shares can be traded publicly.

Business Structures

Flat Structure: Organisation arrangement with few or no levels of management between staff and executives.
Hierarchical Structure: A pyramid structure where each level has a specific role and responsibilities. This structure has three key parts: directors, middle management, and employees.
Matrix Structure: This structure combines the benefits of functional and product-based structures. Employees have multiple bosses and reporting lines.
Network Structure: Modern structure involving a host of relationships with various organisations including suppliers and distributors. This structure is typically lean on resources and capital.
Franchise Structure: Format where the owner (franchisor) grants a license to another (franchisee) to conduct business under the owner’s brand.

Difference Between Types and Structures

Business type refers to the legal structure of the business, while business structure refers to how the organisation arranges its operations.
Different business types have different legal rights, responsibilities, and implications such as tax timescales, ability to raise capital, and liability in case of business failure.
Business structure affects day-to-day operations, influences culture, and determines the organisational decision-making process.

Key Takeaway

Understanding the type and structure of a business is crucial in the land-based sector. It informs taxation, ownership and liability rules, as well as impacting decision making, efficiency and overall business operations.