Types of Business Organizations By Ownership Activity

Before starting a new business, you should know about the different types of business entities. As you know that business is an activity of Trading Goods or providing services for the sole motive of to earn profit. It serves the considerable assortment of our needs in the public eye.

Types of Business Entities by Ownership

Sole Proprietorships

It is the simplest and easiest form of business, Which did not require any partner and legal formalities for starting the business. Every single person can start with an idea by investing money and run a one-man show. Simple example of these types of business are common in our society, Like a store, a shop of a hairdresser, retailer, wholesaler, Doctor, Advocate. Here one person comes into trade with one’s investment or skill (Providing Services for-profit motive). No legal formation requirement means, one need not any deed, registration to local authority, does not required any permission from government, tax authorities. Sole proprietorships Characteristics are simple one.

Usually, it has a limited area of working and the growth and development is limited as compare to Partnership or Companies. Proprietor play within its skills, finance and area.

Partnership

this the most common types of businesses. In this form at least two partners come into the point for starting a business for the purpose of earning profit. There are multiple types of Partnership. It can be registered or non registered. Usually people works without registering the firm and work together.  Partnership Deed Helps for defining the rights, duties and liabilities of all types of partners.

Main Purpose of this kind of business, to get more worth of the business with huge investment and multi-skilled person management. Business can be run by registering the firm. Which helps in getting more professional working and people trust.

Joint Stock Company

A company is a separate legal entity, an artificial person. Companies are established for getting more worth of finance. One of the main benefits of its are limited liability, Huge source of finance, capital, Long life (No issue with the incoming or outgoing owners), multiple selection of skill source for management, strong edge of borrowing, Tax Benefits etc. Companies are registered under the companies ordinance or companies act as per the government rules and regulations.

There are different types of companies which facilitate us for choosing right as per our source and desire for a business establishment to development.  A good Entrepreneur always chooses the right type of company for overcoming the market share.

Its depend on the person or group of persons to run the business as per their goal.  For small business or for one person, sole proprietor ship is best. Who’s registration is not compulsory. For Medium type partnership give more benefits over single ownership business.

Types of Business Entities by Activity

• Trading: This Type of Business is related only to trading, buying finished goods from one place and sell to others and get profit. Like superstores. In this kind of business owners are not producing the goods. This is the most common form of business, Like supper stores, Garments shops,
• Manufacturing: Some organization producing the goods and sell into the market. They are not selling other products but selling after producing themselves. Like Bakers, Toyota company, Beverage companies, who are manufacturing their products and selling them
• Services: Business is not only trading or manufacturing the products and selling them into the market. But by providing services you can also do the business. Like software houses, Accounting, Tax Services. Here you need to hire skilled staff specific to your business objective and providing facilities to the customer. In return, you charged the services charges. Clinics, Hairdresser, Auto workshops.
• Franchising, Some companies are selling their point of sale for better coverage of business. Like McDonald, KFC, Telecom companies, they are providing facilities to the business partners to come and join their business and get a profit share.
• Multinational company: Like, Coca Cola, Pepsi they are not operating in one country. They have business in multiple countries. These are the call multinational company. They may direct operate in other countries or get business partner in-country with specific terms and conditions.