Study Notes

Different Forms of Business (Overview)

AS, A-Level
AQA, Edexcel, OCR, Eduqas, WJEC

Last updated 7 Aug 2019

Businesses in the private sector can be categorised in two main ways: (1) incorporated and (2) unincorporated businesses.

Different Forms of Business: Incorporated and Unincorporated


  • The owner is the business - no legal difference
  • Owner has unlimited liability for business actions (including debts)
  • Most unincorporated businesses operate as sole traders
  • A small number operate as partnerships


  • There is a legal difference between the business (company) and the owners
  • The company has a separate legal identity
  • Owners (shareholders) have limited liability
  • Most incorporated businesses operate as private limited companies
  • A smaller number operate as public limited companies

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