Before we start up with a business, we generally question the type of business that we should do. This kind of confusions just stops people from doing the business of their wish. You need to choose your own venture, and you should be very clear about it. Choosing a business type is not a difficult task for an aspiring entrepreneur. Below is the list of most common types of businesses that you shall start soon with their respective formalities.
Types of Businesses
To get a clear idea about the business types that you should choose, you need to analyze and get knowledge about all them and start with one.
- Sole Proprietorship
A sole proprietorship is a business founded and owned by an individual. Sole Proprietorship is also known as, “one man show” in terms of business. This type of business is the most common type of business that is chosen by the majority of the people in the bud phase. It is the easiest type, but both profit and liability will be propped up by the entrepreneur only.
A partnership firm is a business that is run by two or more individuals together. All the individuals will be the owners according to the investment in the business. These partners can be any other business, trust or any other organization. The profit and losses will be shared among the partners according to their investment ratio.
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- Joint Venture
Joint Venture is an entity formed under the registrar of the state or the country. The parties that are legally entitled will be undertaking each and every business activity together.
- Limited Partnership
A limited legal partnership is legally incorporated under the country or state’s registrar with some required formalities. It is very similar to the general partnership. It enables the funds to share among several shareholders, in the form of equity or dividends. The partners who have legally signed or agreed between will be responsible for daily business operations. Any decision, the partners have to consider the opinions of shareholders as well. The profit will be shared among the shareholders in the form of equity; the leftover amount will be shared among the partners.
- Limited Liability Company
You might have come across various LLC that can be seen just alongside the registered name of the company or the organization. LLC allows tax favors, and also some personal liability protection which will differ according to the state laws. This is the type of business allows various members and managing members who can simply enjoy the limited liability.
- C Corporation
C Corporation also is known as a traditional corporation. CC is a registered or an incorporated business that creates an individual legal firm which is different from the owner or the founder of the firm. The owner’s personal assets cannot cover the business losses or liabilities.
Not just these, there are various other types of business that you can simply know and put them into practice on your business. Understanding these types is quite simple but, practically it needs a lot of management skills.