What is business? Types business
The activity of making a living or earning money through the production, purchase, and sale of goods is known as business. To verify, a quote is required. Simply put, it is “any profit-making activity or enterprise.”
Because a business name does not separate the entity and the owner, the owner of the business handles the business’s debts. If the company incurs debts, the creditors may pursue the owner’s personal assets. Corporate tax rates are not allowed in a business structure. They taxed the proprietor on all business income.
Types of small business and organization
If you’re thinking about starting your own small business, you might be curious about the various structures and which one would be best for you. These business structures define many aspects of your business, including how ownership, finances, liabilities, and taxes are handled.
Partnership
This type of business is ideal for individuals who will be the only ones in charge of the company. A sole proprietorship, for example, can benefit a freelance wedding photographer who conducts all business operations on their own.
He pays for their own supplies and does not pay wages to other employees. For instance, an individual who runs a wedding photography company with multiple photographers. He might not find this type of organization or structure the best fit for their business objectives.
A sole proprietorship can have both economic and non-economic gains and disadvantages. For example, a wedding photographer who does not have any other employees can keep the profits and earnings of the business as income. They would hold the proprietor personally liable if the wedding photographer incurred a debt that could not be paid back.
Corporations
Corporations, unlike sole proprietorships, are separate from their owners. It can be held legally liable, according to the United States Small Business Administration. Starting a corporation has more requirements. But corporations also have more opportunities to raise capital and funding.
For example, the wedding photographer could buy all the camera and video equipment from a larger company that specializes in such items. Individuals known as shareholders can purchase stock in a corporation and thus own a piece.
It can help them earn money and investment returns depending on how well the company performs. If the camera company is small, the company’s first investors or shareholders may be family members and friends of the company’s founders.
If the camera company expands, there could be hundreds of thousands of additional shareholders.
Limited Liability Corporation (LLC)
A corporation and business arrangement of common nature are the Limited Liability Company (LLC). It restricts the personal responsibility of the company owner, as well as the right to engage in the business of other people, associates, and organizations. The company itself belongs to shareholders of a corporation. In an LLC, multiple partners may be owned, irrespective of the amount they invested in that business.
Joint Venture
According to Investopedia, joint ventures are agreements between two parties to pool their resources and efforts in order to accomplish a common task or goal. A joint venture could include a sole proprietorship, corporation, LLC, or partnership.
These organizations exist to provide or achieve a goal for the betterment of society and humanity, such as the eradication of a disease or the improvement of living conditions for a particular population. The IRS has granted the nonprofit 501(c)(3) status, which means it is exempt from paying certain federal taxes.
Cooperative
A cooperative, also known as a co-op, is a type of business organization in which individuals and parties band together to use the organization’s products and services while also acting as its owners and investors. “These companies differ from other types of businesses in that they are formed and run for the benefit of their members. According to the Houston Chronicle, they are nonprofits in that sense.
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