Business Structures (GCSE Business Revision - BBC Bitesize)

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Owners have to decide on the best legal structure for their business - opting to run as sole traders, partnerships or private limited companies. As the business expands and starts to employ hundreds of staff in many locations, it may decide to become a public limited company or to offer franchises.

Sole traders

A sole trader describes any business that is owned and controlled by one person - although they may employ workers. Individuals who provide a specialist service like plumbers, hairdressers or photographers are often sole traders.

A hairdresser trimming someone's hair (

Sole traders do not have a separate legal existence from the business. In the eyes of the law, the business and the owner are the same. As a result, the owner is personally liable for the firm's debts and may have to pay for losses made by the business out of their own pocket. This is called unlimited liability.


  • It is easy to set up as no formal legal paperwork is required.

  • Generally, only a small amount of capital needs to be invested, which reduces the initial start-up cost.

  • As the only owner, the entrepreneur can make decisions without consulting anyone else.


  • The sole trader has no one to share the responsibility of running the business with. A good hairdresser, for example, may not be very good at handling the accounts.

  • Sole traders often work long hours. They may find it difficult to take holidays or time off if they are ill.

  • They face unlimited liability if the business fails.


Partnerships are businesses owned by two or more people.

A still from the Armstrong & Miller show, a dentist is looking inside a patients mouth. (

Dental surgeries are often partnerships




Brief notes on the business structures with a useful test yourself facility to provide some measure of progress. As with all notes, they are better if adapted for personal use to increase the interaction with them.

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