Understanding Business Structures and Liability

📋 Course Outline

1. Liability and business ownership
2. Sole traders
3. Partnerships and limited liability forms
4. Private limited and public limited companies
5. Not-for-profit organisations
6. Public sector organisations

📖 1. Liability and business ownership

🔑 Key Concepts & Definitions

• Limited liability: Limited liability means owners’ liability for business debts is capped, usually tied to the amount they have invested.
• Unlimited liability: Unlimited liability means owners are personally liable for business debts, so personal assets can be at risk if debts aren’t paid.
• Limited liability company taxes: Separate taxation describes how a limited company is treated separately from its owners for tax purposes.

📝 Essential Points

• Liability type affects debts, business governance, and how the business raises funding.
• Unlimited liability can put owners’ personal assets, such as property they own, at risk if the business cannot pay debts.
• Limited liability usually limits owners’ exposure to the extent of their investment.

💡 Memory Hook

Limited caps risk; unlimited exposes personal assets.

📖 2. Sole traders

🔑 Key Concepts & Definitions

• Sole trader: A sole trader is one person running their own business, typically small and set up with relatively few regulations.
• Unlimited liability sole trader: For sole traders, unlimited liability means the owner is responsible for all business debts.