Activity 1



Different Types of BusinessThere are different forms of business ownership; businesses operate differently depending on their form of ownership. Have a go at the activities below to help you to develop your knowledge of different types of business ownership. Read the background information sheets first then see how you get on with the activities.Activity 1Jack Stewart has just been made redundant from a large tourism company and wants to start his own business and work for himself. Which form of business ownership is the best choice for him?What advice would you give Jack about the risks involved?Activity 2Ella Jones has been running a small tourism business as a sole trader for 10 years. Ella is thinking about asking her sister to become a partner in the business.What will this mean for Ella and her business?If her business grows and becomes more successful what other forms of business ownership options does Ella have? What advice would you give Ella?Activity 3Virgin Group Ltd. employs 50,000 people across 34 different countries, but is still a private limited company (Ltd). How does one man, Richard Branson, manage to keep control of his company?Activity 4A Public Limited Company (plc) is a business which is owned by shareholders who have bought shares on the stock market. If the business does not create the expected amount of profit how does this affect the shares?Activity 5Complete the following sentences by filling in the blanks using the words from the box below.The FORMTEXT ????? FORMTEXT ????? in a FORMTEXT ????? FORMTEXT ????? FORMTEXT ????? limited company (plc) can be bought and sold publicly on the stock exchange. However, private limited company shares are only traded privately, often between family and friends. A private limited company must have the letters FORMTEXT ????? FORMTEXT ????? FORMTEXT ????? after its name. Where a sole trader converts their business to a private limited company and sells shares to others, the original FORMTEXT ????? FORMTEXT ????? FORMTEXT ????? can lose some level of FORMTEXT ????? FORMTEXT ????? FORMTEXT ????? as they are answerable to FORMTEXT ????? FORMTEXT ????? FORMTEXT ?????.Both plc and Ltd companies enjoy limited FORMTEXT ????? FORMTEXT ????? FORMTEXT ?????, which means that personally shareholders can only lose the money that they have invested in the company. A big difference between a company and a FORMTEXT ????? FORMTEXT ????? FORMTEXT ????? trader is that the company has to pay FORMTEXT ????? FORMTEXT ????? FORMTEXT ????? tax instead of FORMTEXT ????? FORMTEXT ????? FORMTEXT ????? tax. 2331085875030shareholders020000shareholders4605020974725owner020000owner229870960120Ltd020000Ltd3722657110106shares020000shares3592195680085liability020000liability1095375860425corporation020000corporation1036955197485income020000income105410212725control020000control4835837186917sole020000sole2167255197485public020000publicActivity 6In the space below, explain the major differences between a sole trader and a private limited company. Give named tourism examples to support your response. Activity 7 The following types of ownerships have been mixed up. After completing the other activities see if you can rearrange them to match the correct description and show that you understand the types of ownership.DescriptionType of ownershipMr and Mrs Jones own and run a guest house on the coast.Sole TraderTJ Lewis owns and runs his own Taxi service called TJ’s TaxisPrivate Limited CompanyLTDDippy Dinosaur Park is run by the Davies family; shareholders are family members.Public Limited CompanyPLCHalls Hotel Group has become a very successful organisation with over 30 properties spread throughout the UK. They are now able to sell shares to the public.PartnershipBrynhenllys Cinema is run by local people. The council help out with grants.Private Limited CompanyLTDBernia’s Bistro is owned and run by two friends, Bernadette and Nia. Not-for-profitOakdale Theme Park is owned and run by the Dale Family with over 20 family members with shares in the business.PartnershipBackground information Sole trader A sole trader is a business that has one owner and is the simplest form of tourism business organisation. Any income or profit earned is the owner’s. However, a sole trader is open to unlimited liability which means that they are personally responsible for any debts and creditors (e.g. banks) will have a claim on your business assets and any personal assets you may have (e.g. your house, car). A sole trader doesn’t necessarily work alone and often employs staff. Many sole traders will operate on a local level; often their main aim is to provide a good product or service to the local community and provide customer satisfaction. Examples could include guest houses, restaurants, small attractions and an airport taxi business.A sole trader is the easiest type of business to set up, all that is required is to register with the tax office and keep good records to enable the tax to be paid once a year. As well as being the simplest type of business to set up, it is also the most risky. All finance, debt or legal issues are the responsibility of the owner and it may be difficult to get financial backing from external investors such as banks.Basically, the owner is the business, so Milly Miles, trading as Milly’s Market, a small craft and gift shop at a UK seaside resort, is liable for all the work such as producing or sourcing her own goods to sell as well as paying any debts if the business folds. However, all the profits belong to the Milly, the owner, who must then pay personal income tax on that money.Partnership The set-up of a partnership is similar to that of a sole trader, however, the business is owned by two or more people (up to twenty). In a partnership, each partner has responsibility for the business. This includes finance, legal issues, a share of property and profits. There is usually a ‘Deed of Partnership’ which details rights and responsibilities within the partnership. It is possible to have ‘sleeping partners’, these are people who do not have any part in the day to day running of the business but still share the financial responsibility and profit. Many accountants and solicitors are partnerships. In the tourism industry examples could include independent travel agents, tour operators and hotels.Limited companies A limited company consists of shareholders who provide money and invest in the company, a board of directors who run the company and employees who carry out the work. Any profit made is owned by the company. After paying Corporation Tax a business can then share its profits. Types of limited company are: Private Limited Company (Ltd) In a private limited company, ownership liability is limited to the value of the shares in the company. This means that any debts are the company’s debts and not the owner’s debts. There is a Director of the company, and the company must keep and declare annual accounts as well as meeting various legal requirements such as registering the business name. These businesses come in various sizes from small family firms to large multinational businesses, for example Virgin Group Ltd. The majority shareholder retains control of the business but all of the shareholders can have a say in the running of the business. Public Limited Company (plc) Like a private limited company, a plc has shares, but the key difference is that these shares can be bought by anyone freely on the stock exchange. Ownership is therefore open to anyone who wants to buy shares. The business is owned by the shareholders who receive a share of the profits, and it is managed by the Board of Directors. A plc has legal requirements in that it must produce annual reports and accounts and file them with Companies House, which are accessible to the public. A plc must have at least two directors and a qualified company secretary. Examples could include easyJet plc and Merlin Entertainments plc (the company’s attractions include Alton Towers, Warwick Castle and Legoland). ................
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