Business Ownership

Two people open a restaurant on the same street in the same month. One signs the lease in her own name. The other spends an afternoon and a small fee registering a company, then signs the lease in the company's name. For two years nothing distinguishes them. Then a fire in the kitchen destroys the building, the insurance argues, and a court awards damages of 300,000. One of them loses the restaurant. The other loses the restaurant, the family house and the car.

That is the difference a legal structure makes, and it is why this topic is worth more than the memory work it looks like. In this lesson you will learn what a sole trader, a partnership, a private limited company, a public limited company and a multinational each are; what limited liability actually protects and what it does not; why the structure a business chooses determines who controls it, who is paid out of the profits and how much finance it can raise; and how the private sector differs from the public sector in a mixed economy. You will finish able to argue, in a case study, which structure a particular business should choose and why.