Types of Organisations

Revise Types of Organisations for Business (Edexcel) 4BS1 (O Level) — revision notes and instant AI marking.

📖 Revision notes · preview

Edexcel IGCSE Business

Types of Organisations

Big Idea: Every business has to choose an "ownership costume" to wear — sole trader, partnership, private company, public company, or something else — and that choice changes who's liable for debt, who makes decisions, how easy it is to raise money, and whether the business survives if the owner leaves. Bigger risk and bigger money needs → bigger, more protected ownership structures.

Summary — The Whole Chapter in One Scan

Sole traders — one owner, unlimited liability, simplest to set up, dies with the owner.
Partnerships — 2+ owners, unlimited liability (unless LLP), deed of partnership sets the rules.
Private limited companies (Ltd) — shareholders with limited liability, shares NOT sold publicly, more paperwork.
Public limited companies (PLC) — shares sold on a stock exchange, huge capital raising power, heavy regulation.
Public corporations — owned & controlled by government, exist to provide public services, not to maximise profit.
Business size — measured mainly by employee numbers (micro <10, small 10–49, large 250+), though this measure is getting less reliable.
Franchises — NOT an ownership type; a way of running an existing brand's business model under licence.
Social enterprises — profit is a means to a social/environmental end, not the main goal (cooperatives, charities).
Multinationals (MNCs) — registered in one country, operate in many, chase cost advantages and market access.
Choosing ownership — depends on risk level, capital needed, desire for control, and continuity plans.

1. Sole Traders

What is a sole trader?

A sole trader is a business owned and run by one person. That person makes every decision and keeps every penny of profit — but they're also the only one on the hook if things go wrong. Think of a local hairdresser, a freelance plumber, or a tutor working from home: one person, one business, total control.

Sole traders are usually very small (though they can employ staff) and are concentrated in the tertiary (service) sector — tutoring, home improvements, taxi driving, hairdressing, and so on. That's because services like these need low start-up capital and can be run by one skilled person.

Key Concept — Unlimited Liability Sole traders have unlimited liability, meaning there is NO legal separation between the owner's personal money/assets and the business's money/assets. If the business owes £50,000 and can't pay, the sole trader might have to sell their car, savings, or even their house to cover it. This is the single biggest risk of being a sole trader.