Business Ownership Structures- The Different Types

There can be absolutely no doubt in the fact that the success of a business is completely dependent on its client base or customers. A business that maintains amiable relation with its customers is always able to survive in this ultra-competitive world of business. There are a number of tools needed for running a business smoothly and for grabbing huge business success. However, for the ones who are new to this world or the ones who are looking to set a business of their own, it is important to have a clear understanding of the different varieties of business ownership structures. There are basically three varieties of business ownership structures. Interested individuals should always have a clear idea of these basic forms prior to getting into business. This can help them in avoiding potential problems. Here, we will have a look at the structures.

         Sole Proprietorship

A sole proprietorship business is one that is owned by a single individual who is known as the proprietor. He or she is the person who manages the entire business. This type of business structure is beneficial for the ones who like to go for small scale businesses because of limited funds. Another advantage of this business structure is that there is a single owner who makes all the major decisions and therefore there is no room for fights and confusions. However some disadvantages of this business structure include all the risks are undertaken by the proprietor whole the personal assets are taken by the creditors.

Partnership

There are basically two types of partnership businesses and they are general partnership and Limited Liability Partnership. The general partnership business is owned by two or more than two individuals. The entire business is managed by the partners. One prominent advantage of this business structure is that the owners share the decision making procedure and the risks as well. However, there are also some disadvantages of this business structure. One basic disadvantage of this business structure is that the partners might disagree on the best methods of running the business and this could result in conflict. The LLP or Limited Liability Partnership business is a type of business structure where the liability is restricted to the assets of the partnership.

 Corporation

There is the general corporation business that is owned by the shareholders or the stockholders of a company. A corporation generally has several owners and the owners usually employ expert and professional managers. The risk of the owners is limited to their personal investments. It is also to be noted that the owners have very little impact on business decisions. Then there is the Limited Liability Corporation or LLC business structure where liability is generally limited. Finally, there is the non-profit corporation structure and the organizations that come under this structure include community based organizations, public high schools, YMCAs and churches. The tax structure for a non-profit organization is completely different for such corporations. These are the three basic business ownership structures that you need to be aware of in order to make up your mind on operating a business that best suits your budget and your skills.…