Types of Businesses

Types of Businesses

There are following types of business.

1. Sole Enterprise
2. Partnership
3. Private Company
4. Public Company

Sole enterprise is business runs by an individual or family members and normally the business is run by the close family member and they enjoy the decision making and profit of the business.
Advantages of Sole enterprise

• More control over operations
• Independent decision can be made
• Less Regulator Requirement to comply with

Partnership is an extension of sole enterprise where close family member or friends start a business and share the profit in agreed ratios. it is important to note that profit not necessarily proportionate to investment made. some partners  may be paid for their skills.
Advantages of Partnership

• This provided an opportunity to raise more finance for operations.
• The decision making remains with few individual so more effective and immediate nature of decision can be made.
• Relatively less regulatory requirement than companies.

Disadvantage of partnership

• The liability of partners is unlimited in case of liquidations
• Death or insolvency may result in dissolution of firm.
• more chance of conflict of interest.

Private Company basically an a corporate form of partnership . The mind disadvantage of partnership that it liability is unlimited. The private company concept is to eliminate this disadvantage.
Advantages of private Company

• The first advantage off course the liability is limited
• The Company will be sued for any dispute not individual
• The company is a separate legal entity
• The company will not liquidate on death of member

Public Company is further extension of private company. Public companies have very large number of investors and shares are traded in the stock exchange. The liability of public company is limited like the private company.
Advantages of Public Company

1. Can undertake huge project
2. Shares can be sold any time
3. Separate legal entity
4. Liability of investor is limited
5. Independent auditor audit the accounts for results
6. Hire the services of high professionals
7.