Types of Business Ownership

Study Notes

A business owned and operated by one individual
The owner has unlimited personal liability for the business's debts and obligations
Easy to set up and maintain, with minimal legal and administrative requirements
Owner has complete control and decision-making authority

A business owned by two or more individuals
Partners share profits, losses, and responsibilities
There are three types of partnerships:
1. General Partnership: All partners have equal liability and decision-making authority
2. Limited Partnership: One or more partners have limited liability, while others have unlimited liability
3. Limited Liability Partnership (LLP): Combines the benefits of a partnership and a corporation, with limited liability for all partners

A separate legal entity from its owners, with its own rights and obligations
Owners (shareholders) have limited liability for the corporation's debts and obligations
Can be publicly traded, with shares bought and sold on a stock exchange
Requires more formal legal and administrative structures, with a board of directors and annual meetings

A business owned and controlled by its members, who share a common goal or interest
Members contribute to the business and share the profits and losses
Often used in industries such as agriculture, healthcare, and consumer goods

A temporary partnership between two or more businesses or individuals
Created to achieve a specific goal or project, with each party contributing resources and expertise
Can be a limited liability partnership or a corporation

A legal arrangement where one party (the trustee) holds property or assets for the benefit of another party (the beneficiary)
Often used for estate planning, tax planning, and asset protection
Can be revocable or irrevocable, with varying levels of control and flexibility

Business owned by two or more individuals
Partners share profits, losses, and responsibilities
Three types: General, Limited, and Limited Liability Partnership (LLP)
General Partnership: equal liability and decision-making authority for all partners
Limited Partnership: one or more partners have limited liability, others have unlimited liability
LLP: combines partnership and corporation benefits, with limited liability for all partners

Separate legal entity from its owners
Owners (shareholders) have limited liability for corporation's debts and obligations
Can be publicly traded on a stock exchange
Requires formal legal and administrative structures (board of directors, annual meetings)

Legal arrangement where one party (trustee) holds assets for another party (beneficiary)
Often used for estate planning, tax planning, and asset protection
Can be revocable or irrevocable with varying control and flexibility