The paper 'Main Types of Business Ownerships" is an outstanding example of business coursework. Pride, Hughes and Kapoor (2014, p. 2) note that businesses play a critical part in the development of economies. In fact, the majority of successful economies today are driven mainly by business ventures. The U. S. economy is a classical example of the major economies that are largely driven by both small and multinational businesses. Accordingly, there are various types of business that an individual or groups of individuals can start. These include unincorporated businesses, such as sole proprietorships and partnerships and incorporated firms, including private and public limited companies.
However, there are three main forms of business ventures that an individual or groups of people may start, including sole proprietorship, partnerships, and corporations. This discourse seeks to define the various types of business ventures. It will proceed to explore the three main forms of business ventures and the various factors that ought to be taken into consideration when starting a business. Type of Businesses To begin with, a business refers to any firm or a system involved in the exchange of services or products for money or another product/service.
Typically, there are three main types of business structures. The first being the sole proprietorship, which is a business venture formed and run by a single individual and family members (Pride, Hughes & Kapoor 2014, p. 9). In a sole proprietorship, the sole proprietor is responsible for capital and the management of the business single-handedly. However, the business owner can involve the family members to assist in the running of the business. The partnership is the other type of business venture.
Partnership, as the name suggests, is a type of business venture formed by two or more members that come together for a common purpose. In a partnership business, each member is required to contribute capital for purposes of starting and running a partnership business. Accordingly, partners are expected to share management, business profits and losses that might occur. The other type of business venture is corporations, including private and public limited companies. A private limited company is one formed by more than 20 members whose liability is limited to the shares held.
However, in order to form a private limited company, it must have legal documents, such as articles and certificate of association. Additionally, it must be registered Companies House. This type of business must have at least one director and must also file its annual reports, which are submitted to the Companies House for review (Spadaccini 2007, p. 48). Public limited company, on the other hand, is a type of business formed by selling shares to members of the public. As such, membership is open to any member of the public.
However, like a private limited company, public limited companies are required to file an audited annual report with the Company House, have no less than two directors and a qualified secretary. Main Types of Business Ownerships There are three key types of business ventures that an individual or groups of persons might form. The three include sole proprietorship, partnerships and corporations. A sole proprietorship is one of the most common forms of business ownership. A sole proprietorship is business ownership formed and run by a single individual. However, as stated earlier, the owner might involve his or her family in the running of a sole proprietorship business.
In a sole proprietorship, the member is responsible for the capital, management and obligations arising from the business. A sole proprietorship is popular because of a number of advantages associated with this form of a business venture. The first major advantage of a sole proprietorship is that the business is simple to start because it does not require huge capital either does it require a lot of legal requirements to start (Boone & Kurtz 2011, p.
92). Secondly, a sole proprietorship is advantages because the owner becomes the boss and responsible for the day-to-day management of the business. Additionally, this form of business ownership is favored because the owner takes all the profits generated. However, sole proprietorships fall out of favor with some businesspersons because of a number of disadvantages associated with this type of business formation. The first major disadvantage associated with sole proprietorships is that the owner is responsible for all the liabilities and losses incurred by the business. For instance, a creditor might claim personal assets of the sole proprietor in case of default of debt.
Secondly, forming the sole proprietorships is disadvantageous because of the limited resources.
Boone, L. E., & Kurtz, D. L. 2011, Contemporary business. John Wiley & Sons, Upper Saddle River, NJ.
Pride, W., Hughes, R., & Kapoor, J 2013, Business. Cengage Learning, Mason, OH.
Pride, W., Hughes, R., & Kapoor, J 2014, Foundations of business. Cengage Learning, Mason, OH.
Spadaccini, M 2007, Business structures: Forming a corporation, LLC, partnership, or sole proprietorship. Entrepreneur Press, New York, NY.