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A business entity is an organization that uses economic resources or inputs to provide goods or services to customers in exchange for money or other goods and services. Business organizations come in different types and different forms of ownership.
Service Business A service type of business provides intangible products products with no physical form. Service type firms offer professional skills, expertise, advice, and other similar products.
Examples of service businesses are: Merchandising Business This type of business buys products at wholesale price and sells the same at retail price. They are known as "buy and sell" businesses.
They make profit by selling the products at prices higher than their purchase costs. A merchandising business sells a product without changing its form. Manufacturing Business Unlike a merchandising business, a manufacturing business buys products with the intention of using them as materials in making a new product.
Thus, there is a transformation of the products purchased. A manufacturing business combines raw materials, labor, and factory overhead in its production process.
The manufactured goods will then be sold to customers. Hybrid Business Hybrid businesses are companies that may be classified in more than one type of business. A restaurant, for example, combines ingredients in making a fine meal manufacturingsells a cold bottle of wine merchandisingand fills customer orders service.
Nonetheless, these companies may be classified according to their major business interest.
In that case, restaurants are more of the service type — they provide dining services. Forms of Business Organization These are the basic forms of business ownership: Sole Proprietorship A sole proprietorship is a business owned by only one person.
It is easy to set-up and is the least costly among all forms of ownership. The owner faces unlimited liability; meaning, the creditors of the business may go after the personal assets of the owner if the business cannot pay them.
The sole proprietorship form is usually adopted by small business entities. Partnership A partnership is a business owned by two or more persons who contribute resources into the entity.
The partners divide the profits of the business among themselves. In general partnerships, all partners have unlimited liability. In limited partnerships, creditors cannot go after the personal assets of the limited partners.
Corporation A corporation is a business organization that has a separate legal personality from its owners. Ownership in a stock corporation is represented by shares of stock. The owners stockholders enjoy limited liability but have limited involvement in the company's operations.
The board of directors, an elected group from the stockholders, controls the activities of the corporation. In addition to those basic forms of business ownership, these are some other types of organizations that are common today: An LLC is not incorporated; hence, it is not considered a corporation.
Nonetheless, the owners enjoy limited liability like in a corporation. An LLC may elect to be taxed as a sole proprietorship, a partnership, or a corporation. Cooperative A cooperative is a business organization owned by a group of individuals and is operated for their mutual benefit.
The persons making up the group are called members. Cooperatives may be incorporated or unincorporated. Some examples of cooperatives are: Online resource for all things accounting.This type of business is simple to form and operate, and may enjoy greater flexibility of management, fewer legal controls, and fewer taxes.
However, the business owner is personally liable for all debts incurred by the business. Home Business Business Types of Ownership Business The pros and cons of different business types of ownership, including sole proprietorship, partnering, corporations, and limited liability companies.
May 04, · When beginning a business, you must decide what form of business entity to establish. Your form of business determines which income tax return form you have to file.
The most common forms of business are the sole proprietorship, partnership, corporation, and S corporation. Business Forms for Small Business | State Specific | US Legal FormsAmerica's 1st Choice · BBB A+ Rated Business+ followers on Twitter.
Definition: A sole proprietorship is a business that is owned and operated by a natural person (individual). This is the simplest form of business entity.
This is the simplest form of business entity. The SBA connects entrepreneurs with lenders and funding to help them plan, start and grow their business.
We support America's small businesses. The SBA connects entrepreneurs with lenders and funding to help them plan, start and grow their business.