A business is defined as any entity or person engaged in commercial, professional, or industrial activities. Businesses may be for-profit enterprises or non-profitable organizations that conduct activities intended to meet a social need or further a worthy social cause. In a country where business activity is prevalent, there are many different types of businesses from which to choose and it would be foolish to try to establish your own if you lack the knowledge, experience, skills, and motivation required to succeed.
A sole proprietorship, also known as a partnership, is the most basic form of business organization. The individuals involved in this form of business relationship are considered the owners, and they have all of the same rights and responsibilities that other owners enjoy. All debts and liabilities are assumed by the individuals or partners in this business organization. This means that they are liable for their own profits as well as for the profits of the business organization they have formed. If one partner dies, the other will be personally liable for the partnership’s debts and the balance remaining after his or her death will be distributed among the remaining partners in the same manner that debts are normally divided among the partners in a partnership.
Other common types of business structures are a corporation and sole proprietorships. A corporation is a separate legal entity from its owners, meaning that it does not share resources with anyone else. Assets are protected and transactions with customers or clients are confidential, although certain limitations apply. Examples of corporations are partnerships and limited liability companies.
A sole proprietorship, also referred to as a partnership, is a limited liability company in which both partners participate in the business agreement. Partnerships share in the liabilities and assets of the company and have limited control over the company’s assets and equity. This type of business structure is often used for start-up ventures or small businesses that lack the capital to support a legal structure.
In most countries, sole proprietorships and partnerships are very common. However, there are some countries that have different business structures. Most sole proprietor businesses are in industries where taxes are low and the business can benefit when the economy is booming. Examples are restaurants and retail shops. These businesses have high barriers to entry and profit margins are small, but they can make money when the economy is doing well because of tourism and foreign investment.
Sole proprietor businesses are different from corporations and sole proprietor relationships but share some similarities. When a corporation takes on debt, it generally passes the liability to another corporation that takes on the debt in order to keep the business going. If one owner dies, the other can take over and continue making payments, depending on the written contract. Examples of this business structure are partnerships and sole proprietor companies.