Before starting any kind of business it is important to have proper knowledge and idea about the different kinds of business which will help you in deciding what type of business you can start as per your choice, capability and preference. A business may be organized in different ways for financial and taxation purposes.
PARTNERSHIP- It is that form or type of business where two, three or more individuals are involved in managing the business. The partners run the business together and every partner may divide the work between them. In general partnership the partners divide the responsibilities, profit, loss, etc. as per their agreement. In a partnership business it becomes easy to raise the capital as there is more than one investor. It is also easy to form such type of business but great amount of time must be invested in it. In such kind of business disputes and conflicts keep taking places because the partners make the decisions together
SOLE PROPRIETORSHIP- It is a simple form of business organization. It is very much suitable for the start up business and the owner can dissolve the business any point of the time. In this kind of business there is only one owner who is fully responsible and in charge to run and operate the business on his or her own terms and conditions. Here the owners makes all the decisions and controls the overall operations. All profits and losses are bear by the owners, but it also becomes difficult to raise the capital. The sole proprietor has the unlimited liability.
CORPORATION- It is the limited liability firm where the business is owned by different shareholders and is managed by board of directors that are appointed and elected by the shareholders. The shareholders get their profits from the dividend of the stocks and they are free from any kind of the company’s debt. It can easily raise additional amount or fund by selling their stock. The share holders can also transfer their ownership without any issues.
LIMITED LIABILITY COMPANY-In a limited liability company the members of the organization or the company are not responsible for the debts and liabilities of the company. The limited liability company can get dissolve if the company or any member is declared bankrupt or if a member dies. The limited liability company has the same characteristic of the partnership firm, sole proprietor firm and that of a corporation.