Understanding Business Legal Structures and Liability

The video tutorial explains the different legal structures of businesses, focusing on liability. It covers unlimited liability, where business owners are personally responsible for debts, and limited liability, which separates business debts from personal assets. The tutorial distinguishes between sole traders, partnerships, private limited companies (LTD), and public limited companies (PLC), highlighting their characteristics and differences. It also clarifies the distinction between public limited companies and public sector organizations.

What does unlimited liability imply for business owners?

• The business is a separate legal entity from the owners.

• Owners are personally responsible for business debts.

• The business can never declare bankruptcy.

• Owners are not responsible for business debts.

Which type of business is typically associated with unlimited liability?

• Non-profit organization

• Corporation

• Public limited company

• Sole trader

Why might business owners prefer a limited liability structure?

• To prevent the business from making profits

• To make the business inseparable from the owners

• To ensure all profits go to the government

• To avoid personal responsibility for large debts

What is a key characteristic of a private limited company (LTD)?

• Shares are traded on the stock market

• Shares are owned by the government

• Shares are not traded on the stock market

• Shares are owned by a single individual

How does a public limited company (PLC) differ from a public sector organization?

• A PLC is owned by the government

• A PLC trades shares on the stock market

• A PLC does not interact with the private sector

• A PLC is a non-profit entity