U2-1 Legal Structure

Mind Map by jadepalmer98, updated more than 1 year ago
Created by jadepalmer98 over 6 years ago


GCSE Business Studies (Unit 2 (Growing a business)) Mind Map on U2-1 Legal Structure, created by jadepalmer98 on 10/20/2013.

Resource summary

U2-1 Legal Structure
1 Sole Trader
1.1 1 person owns and has full liability of the business
1.2 Advantages
1.2.1 Can make all the decisions
1.2.2 Can keep all the profit
1.2.3 Choose own hours
1.2.4 Easy to set up
1.3 Disadvantages
1.3.1 No-one to share ideas with
1.3.2 All worry and risk for self
1.3.3 Unlimited liability
1.3.4 Hard to take holidays/ sick leave
1.3.5 Limited ideas
2 Partnership
2.1 2-20 owners take responsibility
2.2 Advantages
2.2.1 Share decisions and more ideas
2.2.2 Shared risks
2.2.3 Wider skill sets Salesperson, accountant etc
2.2.4 Able to take leave and holidays
2.2.5 More finance available
2.3 Disadvantages
2.3.1 Share profits
2.3.2 Arguments over decisions
2.3.3 If a partner leaves, partnership disbanded Deed of partnership


  • Voluntary document, states working hours, responsibility, profit share etc
3 Private Limited Company (LTD)
3.1 Can sell shares, but only to friends & family
3.2 Advantages
3.2.1 Sell shares - more capital
3.2.2 Owners have more loyalty
3.2.3 Limited liability
3.3 Disadvantages
3.3.1 Raise less capital than a PLC
3.3.2 Shareholders mean you risk losing full control over the direction of the business
3.3.3 Strong possibility of arguments within family
3.3.4 Shareholders want profit on their investments
4 Public Limited Company
4.1 Advantages
4.1.1 Can sell shares to public Raise a lot of capital
4.1.2 Limited liability
4.2 Disadvantages
4.2.1 May be taken over by a shareholder
4.2.2 Shareholders might want short-term returns
4.2.3 Expensive to set up
5 Franchise
5.1 Advantages
5.1.1 Tried and tested brand
5.1.2 Set up using well-known existing brand name
5.2 Disadvantages
5.2.1 Royalties paid to the franchisor
5.2.2 Make few decisions for the business
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