Unit 1.4
This presentation is the property of its rightful owner.
Sponsored Links
1 / 84

Unit 1.4 PowerPoint PPT Presentation


  • 69 Views
  • Uploaded on
  • Presentation posted in: General

Unit 1.4. Making the Start-up Effective. 10 Questions. Enterprise. The Marketing Mix. Innovation. Customer Service. Blue Skies Thinking. Downside. Market Research. Patent. Unique Selling Point (USP). Trademark. Sizing up the business. Businesses vary in

Download Presentation

Unit 1.4

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Unit 1 4

Unit 1.4

Making the Start-up Effective


Unit 1 4

10 Questions

Enterprise

The Marketing Mix

Innovation

Customer Service

Blue Skies Thinking

Downside

Market Research

Patent

Unique Selling Point (USP)

Trademark


Sizing up the business

Sizing up the business

Businesses vary in

size, from your small local corner shop or butchers…

…tomultinational chains such as Tesco and McDonald’s.

The size of a business tends to be related to its

type of ownership.


Small business ownership

Small business ownership

There are two types of small private business ownership:

  • the sole trader or proprietor – the ‘one person’ business;

  • the partnership – between two and twenty people sharing ownership of a business.


Sole traders

Sole Traders

Sole traders are the most common form of business.

In Britain, 63% of all businesses are owned and run by one

person. Sometimes the sole trader, or proprietor, will need to employ other people, but often they work alone.

Sole trader businesses typically include plumbers, florists, hairdressers, newsagents, electricians

and photographers.


The factors of production

The factors of production


Choosing a trading name

Choosing a trading name

Sole traders can use their own name, or make up a trading name under which their business will be known. The name does not have to be registered, but it must be original.


What s in a name

What’s in a name?

Do you know the origins of the names of these famous British

companies?

Imagine you are setting up as a sole trader in one of these areas. Think of an original, suitable name for the business:

  • Picture framing

  • Photography

  • Plumbing

  • Hairdressing

  • Cake-making

  • Floristry


Unit 1 4

Voice Data Fone:

Provision of voice and data

services by mobile phone

His Master's Voice:

The name was coined in 1899 as

the title of a painting of a Jack

Russell Terrier dog Nipper listening

to a wind-up gramophone.

Tesco:

Name after the founders:

T EStockwell and

Jack Cohen


A risky business

A risky business?

In law, there is no distinction between a sole trader and their business; they are regarded as one and the same thing.

The sole trader is therefore personally responsible for all activities anddebtsof the business.

Sole traders have what is known asunlimited liability.

This means that if their business fails, they would have to sell their personal belongings if necessary in order to pay off debts owed by the business.

What do you think business debts might include?


A risky business1

A risky business?

Debts incurred in a business could include:

  • capital borrowed from the bank

  • money owed to suppliers

  • employee wages.

If these debts are not repaid, the

sole trader can be taken to court

and madebankrupt.

Small-business owners therefore

stand thegreatest riskby putting

their own money into the business.

However, if the business is a success, it is the sole owner who gets all theprofits!


Sole trader advantages and disadvantages

Sole trader advantages and disadvantages


Small business ownership1

Small Business Ownership

Sole Trader

  • A sole trader business is owned by ……..

  • Typical sole trader businesses include plumbers, …… and ……..

They can make their own decisions

They have to work long hours

They keep all the profit they make

It may be difficult to raise the money needed to start up

They have unlimited liability: they are responsible for all debts

It is easy to set upBusiness Name Origins


Unit 1 4

Unlimited

liability

Fred has just been made

redundant. He has £10,000 of savings and decides to set up his own business.

He calculates

this is not enough

to start-up his

own firm.

He sets up as

a sole trader

and borrows

£5,000 from

his bank.

He sets up “Removals R Us” and

prospers for the first 5 years.

Each year Fred keeps all the profit

he makes.


Unit 1 4

Unlimited

liability

Then the housing market

slumps and the firm starts

to make a loss. Fred owes money to his suppliers

the suppliers want paying!

He has to close his business and

sell all his business assets in order

to pay the debts.


Unit 1 4

Unlimited

liability

But, there still isn’t enough money

to pay all the debts. Mr Grumpy

supplier is still wanting his money

and there isn’t any!

So what happens?

Mr Grumpy supplier

can then get paid!

But poor old

Fred is back

to square

one.

Fred’s family possessions

HAVE to be used to pay

off the debts.


Unlimited liability

Unlimited Liability

Unlimited liability means that the owner of the business is responsible for paying the business debts.

Using the information provided, answer the following question:

What would happen if a sole trader could not pay the business debts?

  • Business closes down

  • Business assets are sold

  • Money used to pay debts

  • If not enough, personal possessions used


Unit 1 4

Small business ownership

There are two types of small private business ownership:

  • the sole trader or proprietor – the ‘one person’ business;

  • the partnership – between two and twenty people sharing ownership of a business.

  • Partners usually sign a “Deed of Partnership”


Unit 1 4

Partnership

  • A partnership business is owned by ……..

  • To identify how the profit and debts are shared, partners usually sign a ………

They share the decisions

They have to share the profit they make

The partners may disagree

They have unlimited liability

It is easy to set up

They share the workload


Examination questions

Examination Questions

  • Alfie is a gardener and has run up debts of £50,000. In addition, he owes £10,000 to the bank. He invested £75,000 in his business. How much of the business debt is he responsible for paying?

  • £75,000

  • £50,000

  • £60,000

  • £10,0001 Mark

  • Would you recommend setting up as a sole trader business? Give reasons for your decision and discuss the advantages and disadvantages in your answer.

    7 Marks


Large business types

Large business types

Along a typical high street there will be many different types

of large businesses and organizations, includingfranchises, limited companies,co-operativesand businesses in thepublic sector.

Each of these large business types involve different responsibilities and involvement for the owners.


Limited companies

Limited companies

Limited companies are very different from partnerships and sole traders. With a sole trader, the owner is the business.

In contrast, limited companies are:

  • owned byshareholders– people who invest money in shares of the company;

  • run bydirectors– people appointed by shareholders to control and make the strategic decisions for that company.

A limited company is therefore set up as aseparate bodyfrom its owners.


Limited liability

Limited liability

Owners and shareholders in a limited company are protected

bylimited liability.

This means that they have limited

responsibility for the business debts.

They cannot lose any more money than they have invested in the company, and cannot have their personal possessions claimed in order to pay back debts that are owed.

For this reason, setting up a limited company is relatively low risk.

How is this different from the responsibilities in

sole proprietorships and partnerships?


Setting up a limited company

Setting up a limited company

Unlike sole proprietorships and partnerships, which are

simple to set up, limited companies must produce

paperwork and follow certain procedures when setting up.

All limited companies in the UK have to register with the Registrar of Companies atCompanies House.In return, they are issued with a

Certificate of Incorporation. This is an

official document which shows that the

company has come into existence.

In addition, a limited company must produce:

  • aMemorandum of Association, which states who they are, where they are based and what they do.

  • Articles of Association– an internal ‘rulebook’, which sets out how the business will be run.


Documentation

Documentation


Types of limited companies

Types of limited companies

Have you ever seen the letters ‘Ltd’ or ‘PLC’ after acompany’s name? Do you know what they stand for?

There are two types of limited company:

  • ‘Ltd’ or ‘Limited’ after a company’s name tells you it is a

  • private limitedcompany.

  • ‘PLC’ after a company’s name tells you it ispublic limited

  • company.


Types of limited companies1

Types of limited companies

The difference between a private and public limited company

lies in the ownership of theirshares.

In a private limited company there is restricted ownership. Shares in the company can only be sold if all the shareholders agree to it.

Shares in public limited companies are sold on theLondon Stock Exchangeand can be bought by members of the general public.

A private limited company can start up with as little as £1 inshare capital, whereas a public limited company must have at least £50,000 worth of shares to begin trading.


Private limited companies

Private limited companies

Private limited companies tend to be smaller than public limited companies. The main shareholders in a private limited company are often also the directors of the company.

Private limited companies typically include recruitment consultants, building firms, estate agents and caterers. Many private limited companies are family-run businesses.

Why might people setting up a business decide to become a private limited company rather than

form a partnership?


Limited companies1

Limited Companies

1.Limited Companies are owned by ………………...

2.The shareholders elect a …………….. to run the company.

3.Every year the directors hold an ……………..

4.Limited companies can be private (Ltd) or public (PLC).

5.A private limited company usually sells shares to ………………………..

6.A public limited company sells shares on the Stock Exchange to the ………………….

Annual General MeetingShareholders

Friends and familyGeneral public

Board of Directors


Unit 1 4

Fred has just been made

redundant. He has £10,000 of savings and decides to set up his own company.

He calculates

this is not enough

to start-up his

own firm.

He persuades

his friends to

invest in his

company. They

all buy £5,000

of shares each.

He sets up “Removals Ltd” and

prospers for the first 5 years. Each

year the shareholders receive a

share of the profit. Fred gets 2/5 and

his friends get 1/5 each.


Unit 1 4

Then the housing market

slumps and the firm starts

to make a loss. The company

owes money to their suppliers

the suppliers want paying!

He has to sell all his company’s

assets in order to pay the debts


Unit 1 4

But, there still isn’t enough money

to pay all the debts. Mr Grumpy

supplier is still wanting his money

and there isn’t any!

So what happens?

Mr Grumpy supplier

doesn’t get paid!

Fred’s family possessions

are safe – they cannot

be used to pay off

the debts.


Unit 1 4

Limited Liability

Limited liability means that the owner of the business is NOT responsible for paying the business debts. The most they can lose is their investment.

Using the information provided, answer the following question:

What would happen if a private limited company could not pay the business debts?

  • Business closes down

  • Business assets are sold

  • Money used to pay debts

  • If not enough, debts are not paid


Private limited companies pros and cons

Private limited companies: pros and cons


Starter activity

Starter Activity …

Sort the statements into three columns:

Sole TraderPartnershipLimited Company


Complete the business ownership table and stick it in your exercise book

Complete the business ownership table and stick it in your exercise book


Unlimited liability and limited liability

Unlimited Liability and Limited Liability

  • If a business cannot pay their debts, the business goes into administration and the business assets are sold in order to pay the debts

  • If there is not enough money to pay the debts, a sole trader or a partnership must use their own savings to pay the debts (unlimited liability)

  • Shareholders in a company have limited liability and do not lose their personal possession


Example sole trader unlimited liability

Example: Sole TraderUnlimited Liability

  • £220,000 is owed by the sole trader

  • Assets are sold and £50,000 is available to pay the business debts

  • Sole trader will still owe £170,000

  • The sole trader’s personal possessions must be sold to pay the £170,000 debt


Example limited company limited liability

Example: Limited CompanyLimited Liability

  • £220,000 is owed by the limited company

  • Assets are sold and £50,000 is available to pay the business debts

  • The company will still owe £170,000

  • The shareholders’ personal possessions cannot be sold to pay the debts


Unit 1 4

Being a shareholder in a limited company reduces the risk compared to being a sole trader or partnership.You could lose your investment, but you will never lose your personal possessions.


People that might be owed money by the company

People that might be owed money by the company

Unsecured Bank Loan

£10,000

Utility Bills

£2,000

Secured Bank Loan eg Mortgage

£200,000

Supplier

£8,000

Assets are sold and

£50,000 is available to

pay the debts. Who

gets paid?

Shareholders


Who gets paid first

Who gets paid first?

  • Secured bank loan

  • Unsecured bank loan

  • Utility bills: gas, electric, water

  • Suppliers

  • Shareholders (if there is any money left)


Page 98 and 106 multiple choice questions page 99 read the case study and answer questions 1 3

Page 98 and 106: Multiple choice questionsPage 99: Read the case study and answer questions 1-3.


Unit 1 4

10 Questions

One person

Shareholder

Board of Directors

Dividend

PLC

2-20 partners

Limited Liability

Ltd

Unlimited liability

AGM (Annual General Meeting)


Legal start up issues and tax lesson objectives

Legal Start-up Issues and TaxLesson Objectives

  • Understand the need to create a suitable name

  • Understand the need for a new business to keep careful records

  • Understand the implications for a small business: VAT, income tax, national insurance and corporation tax


Business names

Business Names

  • The name should be different from any other business

  • The name should promote the business

  • A limited company must register their name and the name must be unique

  • A private limited company must put “Ltd” after their name – this is a warning to other businesses that the shareholders have limited liability.


Unit 1 4

Sole Traders:

Limited Companies:


Unit 1 4

Create a

positive

impression …


Think of an innovative business name

Think of an InnovativeBusiness Name:

  • A Chinese restaurant

  • A plumbing company

  • A mobile disco

  • A travel agency

  • A butchers

  • A hairdressers/barbers

Your group has 3 minutes to think of a name


When you set up a new business you must register with hmrc her majesty s revenue customs

When you set up a new business, you must register with HMRC (Her Majesty’s Revenue & Customs).


Keeping records

Keeping Records

Legally a business must register their business with HMRC (Her Majesty’s Revenue & Customs) and must keep the following records:

  • Details of revenue from customers

  • Details of all business costs

    A business must pay tax and how much they pay depends on:

  • The amount of sales each year

  • Whether or not employees work for the business

  • Whether the business is a sole trader or limited company


Taxes are used to fund the government owned public sector

Taxes are used to fund the Government owned Public Sector

Public Sector Services

  • Education

  • The National Health Service

  • Defence: Army, Navy, Air Force

  • Police Force

  • Prisons

  • Roads

  • Payment of social security benefits


Examples of benefits

Examples of Benefits

  • Unemployment benefit/Job Seeker’s Allowance

  • Child benefit

  • Pensions

  • Incapacity benefit (disabled)

  • Statutory sick pay (paid when you are ill)

    These are paid for through the National Insurance Contributions system – deductions are made from your wage/salary each month. Self employed people must also make National Insurance Contributions.


The public sector and benefits

The Public Sector and Benefits

They are paid for by collecting taxes, eg:

Petrol Tax

Tax on cigarettes

and cigars

Stamp Duty

Tax on alcohol


Unit 1 4

Where taxpayers’ money is spent

Match the amount to the heading

1.NHS

2.Defence

3.Social security payments

4.Education

5.Law and order

£153 billion

£96 billion

£31 billion

£32 billion

£71 billion


Where taxpayers money is spent

Where taxpayers’ money is spent

£96 billion

£32 billion

£153 billion

£71 billion

£31 billion

1.NHS

2.Defence

3.Social security payments

4.Education

5.Law and order


Unit 1 4

Where the taxes come from

Match the amount to the heading

1. VAT

2.National Insurance

3. Corporation Tax

4.Excise duties (cigarettes and alcohol)

5. Income Tax

£146 billion

£48 billion

£89 billion

£76 billion

£40 billion


Unit 1 4

Where the taxes come from

1.VAT

2.National Insurance

3.Corporation Tax

4.Excise Duties

5.Income Tax

£76 billion

£89 billion

£48 billion

£40 billion

£146 billion


Unit 1 4

Tax

Income Tax

  • Sole traders and partners pay income tax on their earnings

  • All employees must have income tax deducted under the PAYE (Pay as you Earn) scheme

    Corporation Tax

  • Limited companies must pay corporation tax on the profit they make

    VAT (Value Added Tax)

  • Businesses must register for VAT if their sales are more than £68k a year

  • They must then charge 20% VAT on their prices

    National Insurance Contributions

  • Most employees must pay NICs to the government – this pays for the benefit system

  • Employers must make a contribution for every employee they have working for them


Mrs wright s salary

Mrs Wright’s Salary

Total Pay£4,079

Tax£694

National Insurance Contribution£307

Teacher’s Pension Contribution£261

£1,262

Net Pay£2,817


Revision legal and tax issues

Revision: Legal and Tax Issues

Which ONE is a tax on earnings?

Which is added on the price of goods and services?

Which is a tax on profits and paid by companies?

Which ONE pays for the benefits system?

Which ONE his when 20% is added to the price of goods and services

Which TWO taxes are deducted from Mrs Wright’s pay?

Which ONE uses the PAYE system?

Which ONE is a tax on company profits?

Which ONE is a tax on income/earnings paid by sole traders and partnerships?

Which ONE do sole traders, partnerships and limited companies have to pay if their sales turnover is more than £68,000?

Which THREE are paid by Mrs Wright?


Legal issues revision

Legal Issues: Revision

Income Tax

A tax deducted from employee’s wages. It is also paid by sole traders and partnerships.

VAT

A tax added on to the price of most goods and services.

National Insurance Contributions

A deduction from employee’s wages.

It is used to help pay for the benefits system.

Corporation Tax

A tax on profits paid by all limited companies.

The money collect from taxes is used to pay for the public sector and the benefits system.


Complete the questions on pages 102 and 103

Complete the questions on pages 102 and 103


P 103 lara york royal kare computers

P. 103: Lara York(Royal Kare Computers)

Question 1:

Explain the type of tax and what the money is used for. Explain who will have to pay this tax in the business.

Question 2: “Analyse”:

Explain the advantages and disadvantages:

Why is accurate record keeping essential?

What are the disadvantages for Lara?

Question 3:

Give your opinion, then justify your opinion – explain all the advantages and disadvantages.


Recruitment training and motivating staff

Recruitment, Training and Motivating Staff

  • Staff may need to be recruited

  • Small businesses must appoint the most suitable staff

  • Staff must be trained to do their job properly

  • Staff must be motivated – they must want to work well for the business at all times


Unit 1 4

Watch the DVD:“Talking Heads”Rank the 5/6 people in order of who you think will get the job.What stages are involved in recruiting a new member of staff?


Unit 1 4

The Recruitment Process

Person


Unit 1 4

Job Description and Person Specification

  • Job Description

    • Detailed explanation of roles and responsibilities of the post advertised

    • Refers to post available rather than person

  • Person Specification

    • Sets out qualifications, skills, experience and personal attributes a successful candidate should possess

    • Vital tool in assessing suitability of job applicants

    • Refers to person rather than post


In pairs produce a job description and person specification for a business studies teacher

Job Description

Work they have to do every day

Work they have to do at home

Person Specification

Qualifications required

Characteristics required

Experience required

In pairs:Produce a Job Description and Person Specification for a Business Studies Teacher


Unit 1 4

Business Studies TeacherJob Description

  • Plans lesson

  • Marks students’ work

  • Attends parents evenings

  • Registers students every day

  • Cover absent staff

  • Prepare students for examinations

  • Take part in extra curricular activities

  • Take on the role of a form tutor


Unit 1 4

Business Studies TeacherPerson Specification

Essential

  • Teaching qualification

  • Degree in Business Studies

  • Ability to teach GCSE and A Level

  • Good communicator

  • Good discipline

  • Well organised

  • Excellent attendance and punctuality

  • Gets on with pupils

  • Good ICT skills

Desirable

  • Further degree

  • Ability to teach ICT or another subject

  • Ability to offer extra curricular activities

  • Has a driving licence

  • Experience of teaching vocational subjects

  • Can inspire pupils

  • Would organise and help with trips


Unit 1 4

Job

Description

Sky TV


Documents used when applying for jobs

Documents used when applying for jobs

Application Form (produced by the business)

  • Personal details

  • Work experience

    CV (Curriculum Vitae) (produced by the applicant)

  • Personal details

  • Work experience

  • Names of two referees

    Letter of Application(produced by the applicant)

  • Details of why you want the job


Short listing and interviews

Short Listing and Interviews

  • Applicants need to be assessed for their suitability for the job

  • Employers usually interview approximately 6 people

  • Interviews can be:

  • face-to-face

  • involve a test

  • involve role play


Laws protecting applicants

Laws Protecting Applicants

Businesses cannot discriminate against people because of their:

  • Gender

  • Disability

  • Race

  • Age

  • Sexual persuasion


Training staff

Training Staff

Induction

  • Training an employee when they start a new job. Eg tour of the building, meeting staff, explanation of equipment, health & safety procedures.

    On-the-job Training

  • Training that takes place in the workplace eg work shadowing. Eg mentoring, coaching.

    Off-the-job Training

  • Training that takes place outside the workplace eg college course. Eg college course, conference at a hotel.


Unit 1 4

Headed Notepaper:

Your address, telephone

number, e mail, mobile

phone number etc

You start here

Format for

Letter of

Application


Test your knowledge

Test your Knowledge

The tax that consumers have to pay on goods and services is called:

  • Income tax

  • Corporation tax

  • VAT

  • National Insurance Contributions


Test your knowledge1

Test your Knowledge

The TWO taxes that employees have deducted from their wage/salary are:

  • Income tax

  • Corporation tax

  • VAT

  • National Insurance Contributions


Test your knowledge2

Test Your Knowledge

What is the name of the tax that companies have to pay based on the profit they make?

  • Income tax

  • Corporation tax

  • VAT

  • National Insurance Contributions


Test your knowledge3

Test your Knowledge

When a business is responsible for paying all their debts, they may have to sell their personal possessions to pay the business debts. This is called:

  • Unlimited liability

  • Limited liability

  • Liquidation

  • Bank loan


Test your knowledge4

Test your Knowledge

The owners of a private limited company are called:

  • Sole traders

  • Stakeholders

  • Directors

  • Shareholders


Test your knowledge5

Test your Knowledge

A private limited company must, by law, do which TWO of the following:

  • Hold an AGM (Annual General Meeting)

  • Put their prices up

  • Take out a bank loan

  • Produce an annual report for their shareholders


Test your knowledge6

Test your Knowledge

The TWO most likely sources of finance for a sole trader setting up their business would be:

  • Venture capital

  • Bank loan

  • Retained profit

  • Using own savings


  • Login