Four Types of Business Ownership by Jack Gerard - Updated August 24, When starting a business, there are a number of decisions that have to be made.
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Course content Course content Different types of business This free course is available to start right now. Review the full course description and key learning outcomes and create an account and enrol if you want a free statement of participation. Free course Different types of business 4 Ownership structures and legal forms Businesses not only vary in size and industry but also in their ownership.
Some are owned by just one person or a Business ownership types group of people, some are owned by large numbers of shareholders, some are owned by charitable foundations or trusts, and some are even owned by the state. Different ownership structures overlap with different legal forms that a business can take.
It is not necessary to go into great detail on legal forms and ownership structures here but a short overview will help you to appreciate the diversity of businesses. At the broadest level it is possible to distinguish between organisations that are owned and run by private owners, those that are owned and run by the state and those that are run by voluntary organisations.
Here we will first look at different types of privately owned businesses. Legal forms and ownership structures of businesses are different from country to country. In the United Kingdom the majority of businesses but not all are sole traders, limited companies or business partnerships UK Government, n.
Sole trader — a person who is running a business as an individual. Sole traders can take on employees — the term implies that they own the business on their own, not that they must work there alone. Limited company — an organisation set up by its owners to run their business.
A limited company is a legal person. Of course, a company is not a person in the sense we commonly understand it. What the term means is that the law regards a limited company as having the same legal standing as a person, i. For example, a limited company can own property. Any profit made after taxes belongs to the company.
The company can then share its profits, most commonly among all the owners. This means that they do not have to pay out of their personal income or assets if the company runs into financial difficulties. There are two main types of limited company: The shares of public limited companies PLCs are traded in the stock market, where anybody can buy shares in the company if they wish to do so.
Private limited companies are not traded in the stock market and other people can only buy shares in them with the approval of the current owners for example, if they are invited to invest in the company by the current owners.
Business partnerships — an arrangement where two or more individuals share the ownership of a business.For many new businesses, the best initial ownership structure is either a sole proprietorship or -- if more than one owner is involved -- a partnership.
Sole Proprietorships A sole proprietorship is a one-person business that is not registered with the state like a limited liability company (LLC) or corporation. Join Eddie Davila for an in-depth discussion in this video, Different types of business organizations, part of Business Foundations.
From the Small Business Administration.
One of the first decisions that you will have to make as a business owner is how the company should be structured. This decision will have long-term implications, so consult with an accountant and attorney to help you select the form of ownership that is right for you. A lesser known ownership style, an S corporation is a type of business ownership that allows its owners to avoid double taxation because the organization is not required to pay corporate taxes.
Instead, all profits or losses are passed on to owners of the organization to report on their personal income tax. The Cambridge IGCSE Economics syllabus requires students to describe (and therefore understand) the following as part of section The private firm as producer and employer.
Ownership is the state or fact of exclusive rights and control over property, which may be an object, land/real estate or intellectual property. Ownership involves multiple rights, collectively referred to as title, which may be separated and held by different parties.
The process and mechanics of ownership are fairly complex: one can gain, transfer, and lose ownership of property in a number.