Types of Business Entities

• A business entity is an organization using economic resources to provide goods/services for money or other goods/services.

Service Business

• Provides intangible products with no physical form
• Offers professional skills, expertise, and advice
• Examples: salons and repair shops

Merchandising/Product Business

• Buys items at wholesale and sells at retail prices
• Known as "buy and sell" businesses
• Examples: grocery stores, convenience stores, and resellers

Manufacturing Business

• Buys products for use as materials in new product creation
• Transforms purchased products
• Combines raw materials, labor, and overhead costs in the production process
• Sells manufactured goods to customers

Hybrid Business

• Companies classified in more than one type of business
• A restaurant combines ingredients (manufacturing), sells wine (merchandising), and takes orders (service)

Sole Proprietorship

• A business owned by only one person
• Is easy to set up and the least costly to form
• The owner faces unlimited liability, therefore, personal assets are at risk
• Commonly adopted by small businesses

Partnership

• A business owned by two or more people contributing resources
• Profits are divided among the partners
• Often used by small businesses
• Some large CPA and law firms are also organized as partnerships

Corporation

• A business organization with separate legal personality from its owners
• Ownership is represented by shares of stock
• Owners (stockholders) have limited liability
• The board of directors, elected by stockholders, control the activities
• Recognized under the law as an entity separate from its owners

Limited Liability Company (LLC)

• Common in the USA as a hybrid with corporation and partnership traits
• Is not technically incorporated
• Owners have limited liability like in a corporation
• Can elect to be taxed as a sole proprietorship, partnership, or corporation

Cooperative

• Owned by a group of individuals and operated for mutual benefit
• Members make up the group
• Can be incorporated or unincorporated

Credit Cooperative

• Promotes thrift among members
• Creates funds for loans that increase productivity

Consumer Cooperative

• Purpose is to procure and distribute commodities to members/non-members

Producers Cooperative

• Undertakes joint production, whether agricultural or industrial

Service Cooperative

• Engages in medical/dental care, hospitalization, transportation, insurance, housing, labor, and communication services

Multi-Purpose Cooperative

• Combines two or more business activities from different types of cooperatives

Cooperative Membership

• Primary: members are natural people of legal age
• Secondary: members are primary cooperatives
• Tertiary: members are secondary upward to one or more apex organizations

Business Model

• It is a company's plan for making profit with information on products/services, target market, marketing, expenses, and profit generation

Brick-and-Mortar Stores

• Traditional business model where products are sold in a physical store

Direct Sales/Retailing

• Buys finished goods from manufacturers and directly interfaces with customers
• Can be online or offline

Franchising

• A manufacturer grants a franchisee selling rights along with business methods
• Car dealerships and service stations are examples of franchising

Marketplace

• Receives compensation for hosting a platform for business to be conducted

Fee-for-Service

• Business model centered around labor and providing services instead of selling products
• Charges by the hour or a fixed cost for a specific agreement

Subscription

• Offers a product for ongoing payment, generally for a fixed duration of benefit

Brokerage

• Connects buyers and sellers without selling a product directly
• Receives a percentage of the amount paid when a deal is finalized

Pay-as-You-Go

• Charges based on the amount of the product/service used, instead of a fixed fee