margaritajones

Business is a legal entity, which is organized to satisfy the demands of consumers by supplying goods and services to them. Most of the businesses are formed to earn profit for its owner. For starting any business, an adequate knowledge about different types of business, is highly important for any capitalist. In order to run a successful entrepreneurship, you need to be well versed with all the detailed knowledge about each and every form of business. Here we are discussing about different types of business that exist in the business world.

The most common types of business are:

• Sole Proprietorship
• Corporation
• Partnership
• Corporative

1. Sole Proprietorship:

Sole Proprietorship is the simplest form of business to start off with. For starting a sole proprietorship business, there are only two things which are required. Those are: Registration of the business’s name and Securing Local Licenses. If you are done with these two, you ready to own a sole proprietorship.



Important Features of Sole Proprietorship:

Some of the features which exist in sole proprietorship are as follows:

• There is only one owner in sole proprietorship.

• The owner is liable for all the debts of his business.

• In sole proprietorship, there is no need of paying corporate taxes.

• Registration of the name of business is required.

• For making the report about the Income and Expense of sole proprietorship, the owner has to fill Schedule C and Form 1040.

Advantages of sole proprietorship:

There are many advantages which make sole proprietorship, a simplest form of business. Some of them are mentioned below:

• Formation of sole proprietorship is very easy.

• Taxation is very simple in sole proprietorship.

• No diversification of profit is there in sole proprietorship.


Disadvantages of Sole proprietorship:

Apart from several advantages of a sole proprietorship, there are some disadvantages as well. Some of them are:

• Unlimited liability of the owner: As sole proprietorship can be owned by only one person, all the liabilities of the firm goes on his account. The owner is the one and only person who will take care of liabilities of the firm.

• Lack of separate identification: Sole proprietorship cannot enjoy its separate identity as it cannot exist without its owner.  Although sole proprietorship involves some disadvantages, it is the best way to start a business.


2. Partnership:
 
The next most common type of business or entrepreneurship is Partnership. Partnership can be started with two or more people. All the partners of partnership, works for a common goal. Partnership is basically of three types: Limited Partnership, General Partnership and Limited Liability Partnership.



Essential Features of a Partnership:

Here are some of the features which exist in a partnership firm.

• No taxation on profits.

• The partners are liable to carry all the debts of the business.

• Three type partners can be involved in a partnership. They are: General Partners, Limited Partners and Silent Partners.

Advantages of a partnership firm:

A partnership firm enjoys several advantages, some of them are:

• A partnership firm can be easily formatted.

• A common goal of all the individuals helps the growth and development of the firm.

• Financing the business becomes easier in partnership as more than one owner is present in this firm.

• Risks and liabilities can be diversified between the partners.



Disadvantages in a partnership firm:

Apart from above mentioned advantages, there are certain disadvantages as well. Some of them are:

• The profit of the firm has to be shared between all the partners.

• Any disparity among the partners can create hurdles in the function of the business.

• All the partners are responsible for any ones misdeed.

Refer: Partnership

3. Corporation:

Corporation can be defined as a legal form of organization, where shareholders invest money and employees invest hard work. You can also take it as a non-human entity. Corporation is playing an important role in the development of world’s economy.

Important Features of Corporation:

There are plenty of features present in a corporation. Some of them are:

• It is a legal entity, which entirely separate from its owners.

• A Corporation can have unlimited shareholders or owners.

• The name of any corporation must end with ‘Ltd.’

• A corporation can issue its shares randomly to its shareholders. It can be shared on the proportion of the interest of ownership.

• Business Corporation Act is the act because of which a corporation can exist in the economy.



Advantages of a corporation:

There are various advantages of corporation which is making it highly successful in an economy. Some of them are:

• The shareholders are not at all liable for the debts of the corporation. However, they can enjoy the ownership of corporation.

• A corporation cannot be dissolved with the absence of any shareholder. It has a separate legal entity.

Disadvantages of a corporation:

Whenever there are some positive aspects, there are some negative aspects as well. Some of the disadvantages of corporation are:

• Taxation is one of the biggest draw backs of a corporation. It has to pay huge amount of taxes for having a separate legal existence.

• ‘Double tax’ is also a major problem in corporation. It means whenever the corporation will meet the profits, then shareholders as well the corporation has to pay tax on that profit.

4. Cooperative:

A cooperative can be defined as business owned by its service users. Mutual benefit is the only factor which is present behind the formation of this business.

Features of a cooperative business:

The features of a cooperative business are mentioned below.

• It is the user- owned as well as controlled business.

• The main objective of a cooperative business is to provide profit to its users or owners.



Advantages of cooperative business:

Some of the advantages which are present in a cooperative business are as follows:

• Job satisfaction is always present in a cooperative business

• Being owned and controlled by the user, it provides actually what is desired by the consumers.

Disadvantages of cooperative business:

Cooperative business has got disadvantages also. Some of them are:

• Growth of a cooperative business is limited. The owners work, just for their benefit .They does not really care for the growth of the business. It becomes a hindrance in the growth of the business.

• Lack of Management is present in a cooperative business. The owners of the business are usually not so sound in managing the things which is not good for any business.

All the types of business which are mentioned above are really beneficial for making a career. The main thing which is required is to have knowledge about them. So go through all the points and put a step forward towards your goal.