Understanding Business: Types and Structures

Understanding Business: Types and Structures

Introduction 

A business is an enterprise involved in the selling of goods or services in exchange for money or, under some rare occasions, in the provision of social services. Companies in this context can range from the local enterprise that may be owned and operated by one family to the multi national company. Thus, the relationships and activities described within this collection of cases underscore the need to understand business in order for the individual to have success in managing his/her own business.

Types of Businesses

Companies are generally described and classified according to their type in business management literature. The most common types include:

  1. Sole Proprietorship: This type of establishment is where the business and its owner are one and the same legally and the business is operated from one’s home. The owner is legally liable for all debts accruing to the business and all business responsibilities.
  2. Partnership: A legal entity through which two or more people manage a business by sharing profits and losses. Alliances can also be nondisclosure agreements where the partners do not need to operate at the same level.
  3. Corporation: In this structure of business, the business entity is considered to be a legal entity, thus the owners of the business or shareholders are not responsible for paying for the debts of the business. Although protection is provided by corporations, these have more difficult conditions of taxation and regulation.
  4. Limited Liability Company (LLC): Functioning as a cross between a corporation and a partnership, an LLC places the owner’s personal assets beyond the reach of the company’s debts and Shariah while the profits are taxed as the owners’ incomes.

Business Sizes and Examples

Businesses also vary in terms of size. Small scale enterprises also known as the small business, and are usually founded and operated by families, or a few people, are significant in the economy. Local examples include restaurants or retail outlets, and are different to a larger chain business. Unlike them, Shop station and Tesco are relatively small scale businesses and don’t have an influential impact on the global business market, they have a few employees as compared to large giants like Apple or Walmart.

How to Start a Business

However, there are some crucial processes that are followed every time one wishes to develop his or her business. A business idea is developed then feasibility studies conducted to see its viability. After this it is followed by formulation of a business plan, that will encapsulate the company’s objectives and the strategies it intends to follow. It is also important to get the permits, licenses, and funding to start up a business as well. So no matter if the business is an e-commerce store or a brick and mortar store, planning always pays off in the long run.

The Bottom Line 

Every business aims at playing the following vital roles within the economy; They are an economic building block which creates jobs, fosters innovation and enhances an economy’s development. Reading through the information on the most common types of formations of businesses and how these companies work can be valuable to new business enthusiasts interested in the intricacies of beginning their own companies. First, D successfully prepared for their vision, second, hard work pays in the most powerful way as any business idea can be turned into reality.

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