There are various types of businesses, each with its unique ownership structure. This course will delve into the details of these types, helping you understand their characteristics, advantages, and disadvantages.
A Sole Proprietorship is a business owned and operated by a single individual. This person is solely responsible for all the profits and losses of the business.
Example: A local bakery owned and managed by a single person.
Full control over business decisions
All profits go to the owner
Simple to set up and operate
Unlimited personal liability
Difficulty in raising capital
Business continuity can be an issue
A Partnership is a business owned by two or more individuals who share the profits and losses of the business.
Example: A law firm owned by multiple lawyers.
More capital available for the business
Shared responsibility and workload
Diverse skills and expertise
Potential for conflicts between partners
Shared profits
Unlimited personal liability for each partner
A Corporation is a business that is a separate legal entity from its owners. It's owned by shareholders who share in the profits but are not personally liable for the company's debts.
Example: Large companies like Apple Inc. or Microsoft Corporation.
Limited liability for shareholders
Easier to raise capital
Business continuity
Complex to set up and expensive to maintain
Potential for conflicts between shareholders and management
Double taxation (corporate and personal)
By understanding these different types of businesses and their ownership structures, you can make informed decisions about the best structure for your business.