Business drives United States society. In some way or another, it touches everything we are involved in; when we look around us, we see all types of businesses. There are restaurants, retail stores, engineering firms, driving schools, and brokerage firms, to name but a few. But of the thousands, if not more, businesses that we wherever we look, all of them can be categorized into one of three broad categories: sole proprietorships, partnerships, and corporations.
Sole proprietorships are businesses created by one individual. They are extremely easy to create; paperwork is minimal, and the fee to start one is small. The owner of the business and the business itself are not separable. So, if someone decides to sue the business and the business does not have enough money to pay up, then the owner’s assets can be seized and used for payment. This is one of the disadvantages of a sole proprietorship. Another disadvantage is that businesses can only grow to a certain extent because of their nature. A benefit of owning a ole proprietorship, though, is that all profits go directly to the owner. Also, the owner can make all of the decisions without interference from anyone else.
The second type of business is a partnership. As the name implies, partnerships have more than owner who share the profits of the business, which is a disadvantage. Partnerships also get certain tax benefits when compared to sole proprietorships. Moreover, because partnerships have multiple owners, they can benefit from different perspective; differences in opinion, however, can also lead to problems for the business. Additionally, even though they do experience some liability for the business, the owners of the partnership do not experience as much liability as do the owners of sole proprietorships. And because partnerships have the resources and leadership of multiples owners, they can grown more than partnerships.
Finally, the last general types of business is a corporation. A corporation is seen as a legal entity, a legal person. As a result, its finances are completely separate from those of its owners. Moreover, there can be millions of owners of a corporation because ownership of a corporation is based on ownership of the company’s stock, which are literally parts of the companies. Corporations issue stock so that the general public can own the business. This allows the corporation to gather immense resources and grow more than sole proprietorships and partnerships can grow. Additionally, corporations enjoy more tax benefits than do partnerships.
The business world is complex yet exciting, and learning about these three types of businesses is the just the beginning to getting involved in business. For more information on the three types of business as well as on other business-related topics, visit www.businessdirectoryforyou.com.