Summary
Summary Unit 1: P1 - EXPLORING THE FEATURES OF TWO CONTRASTING BUSINESS
- Module
- Unit 1 - Exploring Business
- Institution
- PEARSON (PEARSON)
Unit 1: P1 - EXPLORING THE FEATURES OF TWO CONTRASTING BUSINESS
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P1-EXPLORING THE FEATURES OF TWO CONTRASTING BUSINESSIn this report, I will be exploring the features of the two contrasting businesses that I have
chosen as LTD and Not-for-profit organisations. I will outline their ownership, business
structure, and purpose of the business.
Sole trader
A sole trader is someone who owns and runs a business. Although there is only one owner,
they may have employees. Sole traders are typically small businesses or start-ups. Some
examples are hairdressers, barber shops, and small online brand owners.
Sole proprietors have unlimited liability, as they are fully liable for all the company’s
financial and non-financial liabilities, which means the owner is personally responsible for
the company’s debts and other financial losses.
As a sole trader, it is quick and simple to set up, and it has low start-up costs. A sole trader is
their own boss and makes all business decisions which allows individuals to be the only ones
in control over the business.
Being a sole trader entails the risk of unlimited liability. Due to the owner's high level of
responsibility, long work hours and stressful conditions are common, and the owner often
performs many different roles in the business.
Partnership
A partnership is a business with two or more owners. These business owners have equal
responsibility for the company. Some examples of Partnerships that are common in
businesses are law firms, medical practices, and accounting firms.
The owners collaborate and come up with a set of rules. These can be spelled out in a
document called a partnership deed. These owners specify how profits are distributed, how
much of the business each person owns, their roles and responsibilities, and how much of
any business debts each person has to pay.
Because there is more than one owner, decision-making is shared which brings the business
multiple ideas, as well as shared debt responsibility by the owners.
Conflict among owners can occur if there are some disagreements in decision-making, which
can cause one partner to let the others down by failing to uphold their responsibilities in the
business, and like sole traders, there is the risk of unlimited liability.
LTD
A private limited company can be either small or large. Unlike sole traders, LTD has limited
liability which is legal protection for owners and shareholders that prohibits them from
being held personally liable for the debts or financial commitments of the company. A
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