A business is defined according to the law as an independent entity or organized group that carries on commercial, industrial, or administrative activities for earning a profit. Companies can either be non-for-profit or for-profit entities that perform a particular activity to meet a social cause or further an educational charity. In order to be legitimate, a business must carry on business transactions at regular intervals and the amount of revenue collected from the transactions must exceed the total expenses incurred in conducting the business. The word ‘business’ can also be interpreted as being synonymous with trade, profession, occupation or manufacture. But in general use, business refers to any form of undertaking that makes a profit and involves the buying and selling of products or services.
Business enterprises come in various forms like limited liability partnerships (LLPs), partnership, sole proprietorship, corporate entities, business corporations, business combinations, joint ventures, proprietor-worker relationships, franchises, partnerships, outsourcing, selling products or services outside the home state, sole proprietorships, partnerships, etc. A business can also be owned by one person and operated by another person or by a group of persons. Limited Liability Partnership (LLP) is an example of a small scale business that is conducted through an agreement between an independent operator and a partnership, corporate entity or sole proprietorship.
A limited partnership is considered to be an agreement between two or more people whereby one person has an interest in the business and another has an interest in the partnership. The operation of the limited partnership is carried on the basis of trust and liability. For instance, in a partnership, the partnership agreement may provide that each partner has the right to bring actions and claims against the other partner if, and only if, such action or claim is brought within the scope of the partnership agreement.
Many business types qualify as a sole proprietorship; these are firms, partnerships, corporations, LLCs, S corporations, and sole proprietorships. There are some differences between these business types. For instance, a sole proprietor is an individual who owns a sole ownership in the business; he does not share any shares nor do any of his partners. On the other hand, a partnership is an association of individuals where all the members of the partnership have equal rights and responsibilities. Each partner in a partnership has a right to bring a claim or bring actions against the others.
Other business types qualify as corporations. For instance, in a corporation, the corporation is an actual legal business. All the shareholders of the corporation are entitled to vote in its annual general meeting. It has many specific rights, such as being able to bind the other shareholders in order to effect a sale of shares. A partnership however is not a corporation.
You can see that there are various differences between the common business types. The nature and purpose of your business will help you determine which popular business types apply to you. In order to make a profit, your business must generate a profit. If you are unable to pay money for the capital needed to start up your business, you may need to apply for government funding or private funding to continue with your business.