A sole proprietorship is a type of business where there is no legal distinction between the business entity and its owner, so it best fits situations where the organization only has one owner. They are a popular choice for small businesses due to the low initial costs. Also, any generated income is only taxed once, as opposed to being taxed as a company and then again as a personal source of income.
2. Partnership
A partnership constitutes a formal agreement between two or more individuals who agree to run a business together. It can also be established between two or more businesses or between businesses and individuals. The partnership agreement clearly states the amount of authority, potential profits and liabilities that each partner is due. Although the partners share benefits and responsibilities, one partner's choices can potentially affect the entire company.
There are two types of partnerships—general and limited. In a general partnership, all partners assume liability for the company's potential losses, debt and other obligations. In a limited partnership, some of the partners are solely investors who have no managerial control or liability. A limited partnership contains both general partners and limited partners.
3. Corporation
Corporations are companies that have been authorized to act as single entities. When a company's owner incorporates their business, they essentially separate their personal liability from that of the company. Corporations have many of the rights and responsibilities that individuals enjoy, such as owning assets, hiring employees and paying taxes. However, they are subject to state regulation, with a state-imposed board structure and taxation of both business and personal revenue.
Owning a corporation is typically more flexible than other types of business, as you can transfer it in the form of stock. However, the high number of rules and regulations that a corporation must follow typically means you may have to pay higher costs for accountants and attorneys compared to other types of businesses.
4. Cooperative
A cooperative is a business that is operated solely for the benefit of those who own it and use its services. This implies that the business distributes its generated earnings to its members, also called user-owners. The company's members typically vote to elect a board of directors to make any necessary managerial decisions.
Answers & Comments
Answer:
1. Sole proprietorship
A sole proprietorship is a type of business where there is no legal distinction between the business entity and its owner, so it best fits situations where the organization only has one owner. They are a popular choice for small businesses due to the low initial costs. Also, any generated income is only taxed once, as opposed to being taxed as a company and then again as a personal source of income.
2. Partnership
A partnership constitutes a formal agreement between two or more individuals who agree to run a business together. It can also be established between two or more businesses or between businesses and individuals. The partnership agreement clearly states the amount of authority, potential profits and liabilities that each partner is due. Although the partners share benefits and responsibilities, one partner's choices can potentially affect the entire company.
There are two types of partnerships—general and limited. In a general partnership, all partners assume liability for the company's potential losses, debt and other obligations. In a limited partnership, some of the partners are solely investors who have no managerial control or liability. A limited partnership contains both general partners and limited partners.
3. Corporation
Corporations are companies that have been authorized to act as single entities. When a company's owner incorporates their business, they essentially separate their personal liability from that of the company. Corporations have many of the rights and responsibilities that individuals enjoy, such as owning assets, hiring employees and paying taxes. However, they are subject to state regulation, with a state-imposed board structure and taxation of both business and personal revenue.
Owning a corporation is typically more flexible than other types of business, as you can transfer it in the form of stock. However, the high number of rules and regulations that a corporation must follow typically means you may have to pay higher costs for accountants and attorneys compared to other types of businesses.
4. Cooperative
A cooperative is a business that is operated solely for the benefit of those who own it and use its services. This implies that the business distributes its generated earnings to its members, also called user-owners. The company's members typically vote to elect a board of directors to make any necessary managerial decisions.
Answer:
1. sole proprietorship
2. partnership
3. corporation
4. cooperative