BTEC Unit 1 Business Ownership
Task 1 – Report on Purpose and Ownership of Businesses
Jordan Blacker
Introduction:
In this report I will be looking at the different types of business ownership, the purposes of businesses and the
structure of Tesco and British Heart Foundation (BHF). The report will be split into 3 sections.
Findings:
Section 1 - Business Ownership
Businesses can have many different types of ownership. They are all set up differently and involve different
liabilities, responsibilities and also different laws. The different types of ownership and their advantages and
disadvantages are as follows:
Sole trader: A sole trader is somebody who is self-employed and runs their own business. Their name is usually
in the title although this isn’t always the case.
There are several advantages of sole trading/proprietorship including:
• You can have complete control over the business and everything that happens with/around/to it.
• Sole traders also get to keep any profits they make; they don’t have to split it with anybody.
• Information about any sole trading company is kept private. This means that data reports cannot be
viewed by the general public.
• They can also specialise in specific jobs. Many small businesses offer a much more personal service as
they are usually based around one type of service.
• The final advantage is that you can make quick decisions about the business without having to talk to
anybody else about it, as you are the sole worker.
There are also many disadvantages to being a sole trading business including:
• Sole traders are fully liable for debts and other things that go wrong within the business. If you are fully
liable, this means that if you create debts for your business, the government won’t see your business as
a separate entity, therefore you will be expected to pay for these debts or your personal items can be
removed from your possession.
• Sole traders may also struggle to expand due to finance problems. Many sole traders don’t earn enough
money to pay out for a second branch to open or to have several employees to work further out, etc.
• Decision making is completely down to the person who owns the business and this can end very badly
for those who don’t understand finance very well. There is nobody to confer with about the business
making changes, so making one decision could end up with your business being in a large debt
problem.
• Sole traders may need to charge more for their services than a larger scale business would need to.
This is so that they can cover the basic costs of the business and also be able to buy in more equipment
and stock when they need it, rather than buying in bulk like most business.
Types of businesses that work as sole traders include: plumbers, window cleaners, painters and decorators and
small shop owners.
Jordan Blacker
, BTEC Unit 1 Business Ownership
Partnership: A partnership is a business made up of between 2 and 20 partners. The partners’ names are
sometimes incorporated into the business’s name, but again much like a sole trader, this isn’t always the case.
There are several advantages to working in a partnership business including:
• The partners will fund the beginning of the business with start-up capital. This means that the more
partners there are the higher the starting money will be. The more money that is put into the business,
the quicker the business can grow and expand, whilst also becoming flexible. It also means potentially
more profit for the business, which will then be split between partners.
• A partnership is easier to form, run and manage. They are less strictly regulated during the formation
process. As the partners are the only people who get a say in what happens to the business, there is
much more flexibility in management (providing that they all agree).
• There is a shared responsibility for the business; this allows each partner to make the most of their skills
as managers. They could split the work load between them by the skills required, rather than taking on
an equal share each of work that only one partner can do.
• As a partnership, you can help each other with decision making. This means being able to have ideas
and solutions from both partners and being able to negotiate ideas. You can discuss solutions and find
the source of a problem much more quickly with the help of several others.
• One of your managers may be specialist in a specific area that you need help in such as sales or
promotions. This would also be useful to a partnership.
There are also many disadvantages to working in a partnership including:
• There may be disagreements between the partners; this could potentially endanger the business. It is
beneficial when all partners can contribute different ideas to the business, but when there is a mass
disagreement, one partner may feel excluded and leave the partnership, possibly causing a loss of
money.
• Arguments are often over the best interests of the business and what each partner believes to be the
best solution.
• Sometimes there will be much less freedom with management. All partners need to agree on major
decisions, but on occasion a business may just go with the majority. This can again cause
disagreements which won’t be beneficial to the business at all.
• Ordinary partnerships, as with a sole trader, have unlimited liability. This means their personal
possessions can be taken away from them if their business gets into debts they cannot pay off. This
can be countered by forming a limited liability partnership.
• Sharing the financial liability with several partners can be stressful as you may disagree on whose fault
it is if the business gets into debt.
• Taxation laws mean that partners will need to pay tax in the same way sole traders do, by submitting a
self-assessment tax return each year. They are also required to register as self-employed with HM
Revenue & Customs. The current laws state that if the partnership (and partners) brings in more than a
certain amount, they will be subject to larger levels of personal taxation than they would in a limited
company.
• Profit sharing can also be an issue. Some managers/partners may be doing more work than others and
getting paid the same amount. This is going to seem unfair but all of this is agreed in the Deed of
Partnership that all parties sign.
Some examples of partnership businesses include: “Marks & Spencer’s”, “Ben & Jerry’s” and “Berry & Berry
Solicitors”.
Jordan Blacker
Task 1 – Report on Purpose and Ownership of Businesses
Jordan Blacker
Introduction:
In this report I will be looking at the different types of business ownership, the purposes of businesses and the
structure of Tesco and British Heart Foundation (BHF). The report will be split into 3 sections.
Findings:
Section 1 - Business Ownership
Businesses can have many different types of ownership. They are all set up differently and involve different
liabilities, responsibilities and also different laws. The different types of ownership and their advantages and
disadvantages are as follows:
Sole trader: A sole trader is somebody who is self-employed and runs their own business. Their name is usually
in the title although this isn’t always the case.
There are several advantages of sole trading/proprietorship including:
• You can have complete control over the business and everything that happens with/around/to it.
• Sole traders also get to keep any profits they make; they don’t have to split it with anybody.
• Information about any sole trading company is kept private. This means that data reports cannot be
viewed by the general public.
• They can also specialise in specific jobs. Many small businesses offer a much more personal service as
they are usually based around one type of service.
• The final advantage is that you can make quick decisions about the business without having to talk to
anybody else about it, as you are the sole worker.
There are also many disadvantages to being a sole trading business including:
• Sole traders are fully liable for debts and other things that go wrong within the business. If you are fully
liable, this means that if you create debts for your business, the government won’t see your business as
a separate entity, therefore you will be expected to pay for these debts or your personal items can be
removed from your possession.
• Sole traders may also struggle to expand due to finance problems. Many sole traders don’t earn enough
money to pay out for a second branch to open or to have several employees to work further out, etc.
• Decision making is completely down to the person who owns the business and this can end very badly
for those who don’t understand finance very well. There is nobody to confer with about the business
making changes, so making one decision could end up with your business being in a large debt
problem.
• Sole traders may need to charge more for their services than a larger scale business would need to.
This is so that they can cover the basic costs of the business and also be able to buy in more equipment
and stock when they need it, rather than buying in bulk like most business.
Types of businesses that work as sole traders include: plumbers, window cleaners, painters and decorators and
small shop owners.
Jordan Blacker
, BTEC Unit 1 Business Ownership
Partnership: A partnership is a business made up of between 2 and 20 partners. The partners’ names are
sometimes incorporated into the business’s name, but again much like a sole trader, this isn’t always the case.
There are several advantages to working in a partnership business including:
• The partners will fund the beginning of the business with start-up capital. This means that the more
partners there are the higher the starting money will be. The more money that is put into the business,
the quicker the business can grow and expand, whilst also becoming flexible. It also means potentially
more profit for the business, which will then be split between partners.
• A partnership is easier to form, run and manage. They are less strictly regulated during the formation
process. As the partners are the only people who get a say in what happens to the business, there is
much more flexibility in management (providing that they all agree).
• There is a shared responsibility for the business; this allows each partner to make the most of their skills
as managers. They could split the work load between them by the skills required, rather than taking on
an equal share each of work that only one partner can do.
• As a partnership, you can help each other with decision making. This means being able to have ideas
and solutions from both partners and being able to negotiate ideas. You can discuss solutions and find
the source of a problem much more quickly with the help of several others.
• One of your managers may be specialist in a specific area that you need help in such as sales or
promotions. This would also be useful to a partnership.
There are also many disadvantages to working in a partnership including:
• There may be disagreements between the partners; this could potentially endanger the business. It is
beneficial when all partners can contribute different ideas to the business, but when there is a mass
disagreement, one partner may feel excluded and leave the partnership, possibly causing a loss of
money.
• Arguments are often over the best interests of the business and what each partner believes to be the
best solution.
• Sometimes there will be much less freedom with management. All partners need to agree on major
decisions, but on occasion a business may just go with the majority. This can again cause
disagreements which won’t be beneficial to the business at all.
• Ordinary partnerships, as with a sole trader, have unlimited liability. This means their personal
possessions can be taken away from them if their business gets into debts they cannot pay off. This
can be countered by forming a limited liability partnership.
• Sharing the financial liability with several partners can be stressful as you may disagree on whose fault
it is if the business gets into debt.
• Taxation laws mean that partners will need to pay tax in the same way sole traders do, by submitting a
self-assessment tax return each year. They are also required to register as self-employed with HM
Revenue & Customs. The current laws state that if the partnership (and partners) brings in more than a
certain amount, they will be subject to larger levels of personal taxation than they would in a limited
company.
• Profit sharing can also be an issue. Some managers/partners may be doing more work than others and
getting paid the same amount. This is going to seem unfair but all of this is agreed in the Deed of
Partnership that all parties sign.
Some examples of partnership businesses include: “Marks & Spencer’s”, “Ben & Jerry’s” and “Berry & Berry
Solicitors”.
Jordan Blacker
