Types of Small Business
The basic definition of a business is a commercial entity or organization operating for the profit of its owners. Businesses may be either for-profit or non-for-profit entities that conduct business to meet a specific social objective or further a charitable cause. A business may be run by one individual or by many, and the owner may be an individual, an institution, public or private.
A business can consist of any number of activities. They can include manufacturing, processing, trade, marketing, distribution, information services, professional services, or nonprofit associations. Within the various types of business activities, there may be separate positions like managers, employees, consultants, and supervisors. The term “branch” is applied to a company that branches out into several different divisions. A branch is separate from a plant or division of a manufacturing concern, and it generally refers to a geographic location. For instance, a manufacturing concern may branch out into several areas with different names such as office buildings, stores, sales outlets, parts factories, or assembly lines.
There are two types of businesses: sole proprietorship and partnership. A sole proprietor is a single entity, such as a corporation or sole proprietorship, that produces, manufactures, distributes, or markets only its own products or services. Partnerships are groups of related enterprises forming a limited liability partnership. Examples of partnerships include cooperative businesses, joint venture businesses, employment practices partnerships, investment clubs, and owner-employee associations. The most famous example of a partnership is that of Apple and Jobs, the companies that created the personal computer and the worldwide iTunes store.
sole proprietorships have no constraints on the number of partners they can have. In addition, there is no requirement for shareholders. Under the sole proprietorship system, all profits are passed down solely to the owners. The best part about sole proprietorship business is that there is no need for employees, because everything is controlled by the owners. But unlike other businesses, the profits of sole proprietorships are subject to corporate taxation. Furthermore, there is also no requirement for establishing fixed working hours and working procedures in a sole proprietorship business.
On the other hand, a limited liability company or MLM is a set of interrelated or self-contained organizations, which have an established operational relationship with each other and a board of directors. As in a sole proprietorship, the profits from the business are subject to corporate taxation. Furthermore, unlike a sole proprietorship, in a MLM, the profits pass down to the members of the organization. Unlike a corporation, there is no requirement for fixed working hours, no need for annual general meetings, and no need for board of directors meetings.
Small businesses are separated into many different categories depending on their nature and structure. Some examples of these categories are retail sales, professional services, professional financial companies, partnerships, and limited liability companies. In the US, sole proprietor and limited liability companies are the most common business types. However, there are other types of small businesses existing in the US. Some examples of these types of businesses are partnerships, bakeries, and non-profits.