Btec Business P1 Essay

1142 WordsMay 3, 20135 Pages
Unit 1 Task 2 P2- Describe the different types of business ownership, linking this to the size and scale of four different organisations By Megan Quigley Glengaw Store Glengaw Stores is a local business which provides the community with every day. Essential needs like food, milk, electrical, cards, toiletries, bread, ect. Ownership Glengow stores is run by a sole trader which means that is owned and run by one individual and in which there is no legal distinction between the owner and the business. The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor's. The advantages of being a sole trader • Total control of the business by the owner. • Cheap and easy to start up – few forms to fill in and to start trading the sole trader does not need to employ any specialist services, other than setting up a bank account and informing the tax offices. • Keep all the profit – as the owner, all the profit belongs to the sole trader. • Business affairs are private – competitors cannot see what you are earning, so will know less about how the business works and how it succeeds. The disadvantages of being a sole trader • Unlimited liability – • Can be difficult to raise finance, because they are small, banks will not lend them large sums and they will not be able to use any other form of long-term finance unless they change their ownership status. • Can be difficult to enjoy economies of scale, i.e. lower costs per unit due to higher levels of production. A sole trader, for instance, may not be able to buy in bulk and enjoy the same discounts as larger businesses. Size Glengaw is a micro business as it employees less than 10 people. Scale
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