What are they? #
There are several types of business structures, each with its own set of advantages and disadvantages. The most common types of business structures include:
- Sole Proprietorship: A business owned and operated by one person, where the owner is responsible for all debts and obligations of the business.
- Partnership: A business owned by two or more people who share profits and losses, and who are each personally responsible for the debts and obligations of the business.
- Limited Liability Company (LLC): A hybrid structure that combines the flexibility and tax benefits of a partnership with the liability protection of a corporation. Members are not personally liable for the debts and obligations of the company.
- Corporation: A separate legal entity owned by shareholders, who elect a board of directors to oversee the company’s operations. Shareholders are not personally liable for the debts and obligations of the corporation.
- Cooperative: A business owned and controlled by the people who use its services or products, and who share in the profits and benefits of the business.
- Nonprofit: A business organization that is formed for charitable, educational, or other purposes, and which is exempt from paying income taxes.
- Franchise: A business model in which an individual or group buys the right to use the name, products, and services of an established company in exchange for a fee and ongoing royalties.
In Simpler Terms… #
Business structures are like the different ways people can work together to make a business. It’s like building with different kinds of blocks – you can use big blocks or small blocks, or even different shapes of blocks, to make something. In the same way, when people want to start a business together, they can choose from different kinds of business structures, like a partnership or a corporation. Each kind of business structure is like a different set of blocks that they can use to build their business. And just like building with blocks, each structure has its own advantages and disadvantages, and the people starting the business have to decide which structure will work best for them.
What are some examples? #
- Sole Proprietorship:
- Martha Stewart Living Omnimedia
- Michael Dell Inc.
- J.K. Rowling (author of Harry Potter books)
- Partnership:
- Google (founded by Larry Page and Sergey Brin)
- Ben & Jerry’s (founded by Ben Cohen and Jerry Greenfield)
- Hewlett-Packard (founded by Bill Hewlett and Dave Packard)
- Limited Liability Company (LLC):
- The Vanguard Group
- Tesla Inc.
- BlackRock Inc.
- Corporation:
- Amazon.com Inc.
- Apple Inc.
- Coca-Cola Company
- Cooperative:
- Ace Hardware Corporation
- Organic Valley (organic food cooperative)
- REI Co-op (outdoor equipment and apparel retailer)
- Nonprofit:
- The Bill and Melinda Gates Foundation
- World Wildlife Fund
- Doctors Without Borders
- Franchise:
- McDonald’s Corporation
- Subway
- 7-Eleven Inc.
