What are the different types of business? Owning a business is not a joke. There are many things that one should be able to know and understand. There are many factors involved, too. The thing is that the business process is not as simple as providing goods and services to customers. There are permits that are required and regulations that should be followed. There are many types of business that one should know. First, you have to make sure that you know each of the types of business before venturing to the deeper part of it. These types of business are sole proprietorship, partnership, company or corporation, franchises, and others.
Sole proprietorship businesses are types of business wherein there is only one person or entity that is running the business. Among all the other types, this is the oldest known and the simplest. The single person that owns the business basically does everything to run the business. He makes the decisions for the business. Sometimes, he is also a worker in the business. Also, the sole proprietor is the only one who shells out money for the business.
Next, we have partnership. These are types of business that are run by two or more people or entity. The two people, or the partners, of the business will be making the decisions together. They share all the responsibilities as well as they share the profits, debts, and assets that is related to the business.
Third, we have the corporation or company. These are types of business wherein there are people who are investing to make the business run. People who want the business to run will need to invest their money. The money that will be incurred will then be used as the funds of the company. Each of the people who invest will then have a share of the company which is equivalent to the amount of money he invested. When it comes to responsibilities and the decision making, the people who invested (called shareholders) will need to come to a vote.
Private limited companies or private limited corporations are types of business that falls under companies or corporations. These are basically corporations wherein only a certain group of people are allowed to invest. Examples of this are family owned companies. The shares are not being sold publicly, but the business ownership functions as a corporation.
Public limited companies or public limited corporations, on the other hand, are types of business that are the biggest. There are many people involved in running the business. There is a director who leads the decision making and takes on the responsibilities. These are the businesses that are required to show to the public their numbers at certain period of time.
We also have franchised businesses. These are businesses that use a certain business’ name and business model to function. Many people are into getting franchises because it easily becomes successful. This is because people are already familiar with the business. Good examples of franchises businesses are fast foods you see all over the world, such as McDonalds.