B. Units 1 & 2 (t2) - Types of businesses in the UK
Task 2 - Types of businesses in the UK EXTENSION
Sole Traders
The definition of a sole trader is “a person who is the exclusive owner of a business, entitled to keep all profits after tax has been paid but liable for all losses.” The sole trader of a business takes full and personal responsibility over the maintenance of their business, including keeping records and maintaining employee satisfaction. Tax responsibilities include sending a self-assessment tax return every year, keeping a record of all income and expenses and registering for VAT. An example of a sole trader in the creative industry would be a creative freelancer, of whom would be solely responsible for handling the finances, losses, satisfaction etc. of their company.
Limited Companies
A limited company is a private company whose owners are not held liable for any financial losses made by the business, which gives added protection if anything should go wrong. Unlike sole traders, a limited company is distinct from its owners, meaning that the company will continue to exist and run if the shareholders resign. However, it does cost money to set up, unlike sole traders who can set up their business for free. In terms of limited companies in the creative industry, John Young Creative Industries LTD is a limited company set up to offer experience in project management, consultancy and training in for the theatre and events industries.
Partnerships
A business partnership is a legal relationship that is usually formed by a written agreement between two or more parties. Each partner will invest money into a business and thus gain shares from this. There are a few different types of partnerships: general partnership, which consists or partners who participate in the day-to-day operations; limited partnership, which has one or more partners who manage the business and retain liability; and a limited liability partnership, which extends legal protection from liability to all partners, thus being responsible for financial difficulties. Creative England offers a partnership programme for business in the creative industry in order to support industry growth. An example of one of their partnerships is shortFLIX, which offers 18-25s who are not in full-time employment the opportunity to become short filmmakers instead.
Social Enterprises
A social enterprise is a business that uses their profits to make positive social changes. These can include, banks, cafes, etc. As they sell their goods, a social enterprise will then reinvest their profits back into the community to ensure that consumerism continues at a positive rate. As well as this, they also create employment and experience opportunities for those who are most marginalised from the workforce. Cockpit Arts are an example of a creative social enterprise, with their key role being to incubate craftspeople, such as makers and designers - they are also the UK's only business incubator to work with craftspeople specifically.
Charities
Probably the most obvious, a charity is an organisation set up to provide help and raise money for those in need. They may collect profits from others and donate to their chosen cause directly, or they may have people voluntarily donate to them. All charities will have similar aims, including the prevention of poverty, or even just supporting their local industries - most notably the creative industry. Charities must state what their objectives are in order to be registered with the Charity Commission and must annually explain if they are reaching their goals. In order to be classed as a charity, you must be of benefit to particular groups, or benefit the public as a whole. Creative England are a non-profit group in the UK whose aim is to provide funding and debt to creative sectors in need through funding from other organisations such as the National Lottery.
Unincorporated associations
Unincorporated associations are organisations set up through an agreement between a group of people who come together for a reason other than to make profit, eg, a voluntary group or club. The individual members of the group are responsible for any debts and contractual obligations – it is completely free to set up and does not have to be officially registered. Anyone in the creative industry can set this up in order to spread awareness and share talent, although there are not many examples of major unincorporated associations in the creative sectors in the UK.
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