Section two-Business structure . organisation and control

Ownership and internal organisation

In this unit you will learn about: →Entrepreneurs →Sole traders →Partnerships

Businesses are in either the private sector or the public sector according to whether they are owned private individuals and organisations or the government.

Even within these categories .however .there are different types of business organisation and ownership

All business are owned by individuals or groups of people→The private sector consists of organisations that are owned and operated by one or more private individuals or other private organisations→The public sector consists of organisations wholly owned and operated by the national or local government

Unlimited liabilityThe owners of the business are responsible for all the debts the business incursDebts must be paid in full by the owners

Limited liabilityThe owners of the business are only responsible for the debts of the business up to the amount they have invested in the business

Type of investment in which a partner or investor cannot lose more than the amount invested. Thus, the investor or partner is not personally responsible for the debts and obligations of the company in the event that these are not fulfilled

A type of investment in which a partner or investor can lose an unlimited amount of money. opposite of limited liability

Incorporated and unincorporated business

Unincorporated business

INCORPORATED BUSINESS

-Owned by one person

-Not registered or recognised

as companies

- Separate legal identify from their owners

Sole traders and partnership

Private limited companies and public limited companies

An entrepreneur is somebody who has the ability ,enthusiasm ,vision and skills to come up with a business idea and gather together the resources to enable production to take place

Is it worth the risk?The entrepreneur will take decisions such as-What goods or services to produce -How to produce them-How much to charge Decisions in business involve some risk.

What is an entrepreneur?

A sole trader or trader is someone who owns his or her own business . There is one owner who makes all the decision and is responsible for the day-to-day running business .A sole trader can employ others . The owner is self-employed

Setting up as a sole trader-Must declare any profit or loss made during the financial year ,as this will be their income for tax purposes-Pay other taxes-Must comply with employment laws and health and safety regulations

The main sources of finance-Loans from family or friends-Redundancy payments-Government and other grants-Bank loan-Personal savings-Mortgaging own property

What happens if things go wrong?The owner has unlimited liability for any debts incurred by the businessBecause a sole trade is an unincorporated business

SOLETRADER

The advantages and disadvantages of operating as a sole trader

-Owner works for him or her self-Low start-up costs-Few legal requirements-Owner keeps all profits-Owner has full control of business

-Unlimited liability for the owner-Few sources of finance-Owner responsible for all aspects of the business-owner has to take all decisions-Usually involves hard work and long hours

Advantages Disadvantages

A partnership is an unincorporated business that owned by two or more people .The partners are self-employed.

Setting up a partnershipMany partnerships are established with deed of partnership,and itssets out the rules of the partnership,including:-How much money each partner has to put into the business-Who is responsible for decision-making-The specific responsibilities of partners-How the profits of the business are to be shared or used-the procedure for removing a partner or introducing a new one to the business-arrangements for dissolving the partnership and ending the business

What happens if things go wrongAs a partnership is an unincorporated business,the paertners have unlimited liability for any debts the business may haveIf one partner can`t pay,the remaining partners are still responsinle for the whole of the debts of the business

Partnership

THE ADVANTAGES AND DISADVANTAGES OF PARTNERSHIP

-Owners are self-employed-Owners have full control over business and profits-Few legal formalities

-Unlimited liability for each of the owners-The partners have full responsibility for all aspects of the business-Disagreement between partners may cause difficulties with the business-The business may not survive the loss of one of the partners

Advantages Disadvantages

Thanks for pay attention

Enerel ZolbooGantuul NyamjargalNamuunzul Enkhmandakh