Three Types Of Business Ownership
2) Limited Partnership – some partners control and manage the business, who may be entitled to a specific salary or greater share of profits. The others contribute only capital and are liable for debts to a certain extent.
3) Joint Venture – it is a general partnership but set up for a limited period of time only. They are mainly formed for a single project.
A partnership normally has a minimum membership of two partners and a maximum of fifty. However, for professional firms the maximum membership is twenty. Partnerships can also be formed by two or more companies, whereby they join forces in a consortium or venture. After selecting the type of partnership they want, the business must be legally registered in the state office. Once registered, the partners must apply for business permits and licenses (All Business Editors, n.d.). Partnerships must file an annual information return. Generally, this document reports the income, gains, losses, and deductions from the business’s …show more content…
They preferred a partnership form of business since each member had technological knowledge and skills.
Corporation is the most complex type of business ownership among the three. It is a legal entity partially owned by shareholders. Public corporations trade their shares on a public stock exchange platform, but most corporations lie in the private category. The shareholders are not personally liable for the obligations, debts, or acts of the corporation. Instead, the directors and managers are liable since they are directly involved in the operations of the business. A corporation can be formed through registration, charter, or statute. Formation requires the members to develop a legal document known as the “Articles of Incorporation” and submit it to the state. The shareholders should decide on the type of corporation they want to form, which could include C Corporation, S Corporation, or Non Profit Corporation among others (Hansen, 2008). Most corporations are formed with the aim of providing returns, but some do not necessarily have to be profitable, for example Non-Profit