BT (Business and Technology): Types of Business Organisation

Summary

There are three main business structures: sole traders, partnerships, and companies.

• Sole Traders: Owned by one person, easy to start, full control, unlimited liability.
• Partnerships: Shared ownership, pooled resources, governed by partnership deeds.
• Companies: Separate legal identity, limited liability, owned by shareholders, run by directors.

Key Differences:

• Liability: Unlimited vs. limited
• Regulation: Low for sole traders, high for companies
• Profit distribution: Sole traders keep all, companies pay dividends

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Multiple-Choice Questions (MCQs):

1. Which type of business offers limited liability?

   • A. Sole trader
   • B. Partnership
   • C. Company ✅
   • D. Informal business
     Explanation: Companies are separate legal entities.

2. A sole trader’s liability is:

   • A. Shared
   • B. Capped
   • C. Unlimited ✅
   • D. None
     Explanation: Sole traders are personally liable.

3. Partnerships are regulated by:

   • A. The Companies Act
   • B. Partnership agreement ✅
   • C. Corporate Governance Code
   • D. Shareholder memo
     Explanation: A deed of partnership governs partnerships.

4. Companies must publish:

   • A. Nothing
   • B. Internal memos
   • C. Financial statements ✅
   • D. Only emails
     Explanation: Companies must file accounts.

5. Profit in a company is distributed as:

   • A. Salary
   • B. All to directors
   • C. Dividends to shareholders ✅
   • D. Bonuses only
     Explanation: Shareholders receive dividends.