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Forms of Business
Partnerships
Description
The most common business organization after sole traders that has more than one owners which share a responsibility for running the business and sharing the profits
Characteristics
Are often found in professions such as accountants, doctors, vets, and solicitors.
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Partners may draw up a deed of partnership, a legal document that states partners' rights in the event of a disagreement.
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Limited Partnerships
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Disadvantages
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Ownership can be harder to transferred compared to other entities such as limited liability companies
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The share in profits and losses of sleeping partners is limited by the amount of his/her contribution.
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Characteristics
A type of investment partnership, often used as investment vehicles
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Consists of general partners who have unlimited liability and sleeping partners who have limited liability
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Sole Traders
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Advantages
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Business is independent, owner has complete control
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Characteristics
Varies in size, ownership, and legal structure.
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They have legal responsibilities to pay taxes, comply with legislation, have a planning permission and licence to trade, and register for VAT once their turnover reaches a certain level.
Description
The simplest form of business organisation with one owner who can employ people and be involved in a wide range of business activities.
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Franchising
Description
A business whereby the owner licences its operations along with its business ideas, methods, products, branding, and knowledge, in exchange for a franchise fee
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Characteristics
The franchisor provides the franchisee a licence to make a product that is already tried/tested in the marketplace
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Over time, the brand should be developed by the franchisor
Most franchisors charge a percentage of sales for ongoing management services/right to use the brand name
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Social Enterprises
Description
Organisations that trade with the aim of improving human and environmental well-being, rather than making profit for external owners.
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Online Businesses
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Characteristics
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For many online businesses, paid-for or sponsored advertising is their main source of revenue
Advantages
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Free from geographical restrictions; customers will be able to place orders from any part of the world, so there is potential access to a global market
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Lifestyle Business
Description
Business set up and run by its founders with the aim to make enough money and provide the flexibility needed to pay for a particular lifestyle
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Advantages
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Running the business is likely to be much less stressful than other forms of business; allows owners to live their life
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