Types of business
On your journey to online business, it is imperative to explore the different types of businesses that you can adopt to run. And at the same time, look forward to making money online.
On the contrary, this article is not solely in consideration of online business, it equally addresses on ground business (i.e, physical businesses). Because, on ground businesses are the most evident of these business types. You tend to see different people running different business types daily.
Quick note: on ground businesses here means any business run offline that also has potentials to exist online. For instance, that Mr Jack’s Teddy store on the street of Chicago is a veritable example of an on ground business.
However, on ground businesses are worthy ambassadors of these seven businesses types that you can run or operate.
Below are the commonly seen types of businesses. No business exists outside this category of 7 most commonly engaged types of businesses. Now, sit tight as we cruise through in exploration of these business types. Cheers!!!
Are you hoping to start your own business but confuse about the types of business to operate? Whether offline or online…Congratulations! You’re on the right page. It is high time you realized that entrepreneurs like you all over the World are the catalytic movers, and shakers of global economy. To fast track you, I HAVE PUT DOWN the seven most common types of business (types of businesses).
If you’re just starting your own business, or you have already created one, you’ll definitely need to create a business plan. Business plan helps you better outline your business goals before committing to one of the business types below.
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Want to start a business? Then, what type of business should you start?
This is the usual question in the minds of aspiring business owners. They are always bugged with the question, “What type of business is better for my current status?” Well if you wishes to make money in life, thereby creating wealth, there are several types of businesses you can opt for. Whatever business type you choose, do know that there is a legal angle involved. You have to acknowledge this legal angle in order to be legally recognize in the eyes of the Law. Moreover, choosing a business type to operate is no big deal. The legal hurdle to jump should be the most worrying aspect, particularly, when you are on budget.
Obtaining the legal documents before starting a business could sometimes be intimidating. This has negative impact on the psyche most of the-would-be business owners. As such, most lily-hearten entrepreneurs often drop their business ideas and plans. While a host of others will toe the line of operating their businesses illegally, and often clash with government agencies.
Back to the topic, although there are several different types of businesses, choosing one doesn’t need to be difficult.
Below are the commonly seen types of businesses. Like I stated earlier, no business exists outside this category of 7 most commonly engaged types of businesses. Now, sit tight as we cruise through in exploration of these business types. Cheers!!!
7 most common types of businesses:
- Sole Proprietorship:A business owned and operated by a single person.
- Partnership:A business owned and operated by other than one person, where exists the sharing responsibilities
- Limited Partnership:General partner(s) run the business, while limited partners invest
- Corporation:A business organization owned by group of individuals, and is operated for their mutual benefits. fully-independent business with shareholders
- Limited Liability Company (LLC):A hybrid of a partnership and a corporation, designed to make it easier to start small businesses
- Nonprofit Organization:A business that uses its profits for charitable courses. Also called, Charity Organization.
- Cooperative (Co-op):A business owned by group of people, and often operated for the benefit of the members of the organization that use its services
Sole Proprietorship (The king Among The Types of Businesses)
Without much ado, a Sole Proprietorship is business type that is owned by one person. This is the most popular of the type of businesses out there. It is the kind of business you see every day on the streets, markets, and some other public places. Sole Proprietorship doesn’t require the usual legal hurdles that other types of business face. This business type is simple because it is run by only one person. If you float a business today to make money, be it online business, or brick and mortar store kind of business, you are practicing Sole proprietorship. Because, in sole proprietorship type of business, you don’t need any government approval to run it.
However, getting approval of some sort is not entirely ruled out in sole proprietorship kind of business. This is so because certain products and services require license before you can deal and operate without hitches. To this effect, it partly depends on location of the business.
Quick note: Sole proprietorship are the most common type of online business. Any day, you start a business online; you are majorly a sole proprietor. It is easy because of the single operator involved.
In Sole Proprietorship, the owner is not accountable to anyone. Whether there is profit, liability issues, or legal action facing him, he shoulders every consequences of his business. He bears his cross all by himself. If you’re starting an ecommerce store business by yourself, a sole proprietorship is probably the best type of business for you.
Quick note: If you’re starting a business with one or more partners, it is no longer Sole Proprietorship.
This is the coming together of two or more people to float a business. These people coming together are not unexpectedly like minded individuals with the same business orientation. Sole Proprietorship type of business is founded on the principle that ‘Together, we stand, for no man is an island’
Partnership type of business is the best for extroverted individuals who like hanging around with friends and doing stuffs collectively. If you can’t do jack without involving others, then you are naturally wired to be in Partnership type of business.
If you are in Partnership business, it is a known fact that the profit margin is usually high. People in partnership stand the chance of making money big time. However, it doesn’t come by without its own hurdles.
Partnership type of business, are always subjective to some kind of financial obligations: taxation, and so on owner. Depending on how the ownership is divided (either equally or not), there are different types of partnerships for you to explore from a legal standing point.
Partnership is sweet but painful at the same time. In partnership, you will be required to register your business with your state. Thereafter, you give your business an official business name.
They are not yet finished with you partners. You’ll then be asked to obtain a business license, along with any other documentation that your business location requires. Beyond that, you’ll also need to register your business with the IRS for tax purposes.
I do not want to scare you. I am just stating the obvious fact. It appears complicated; however you stand to benefit a lot in due time for this type of business is lucrative.
It is worthy of note that many online businesses, companies are formed using partnerships.
Quick note: Even if you chicken out from Partnership type of business, and opt to Sole Proprietorship, your business would one day grow. And when it does, there will be need for an expansion. Then, you will be forced out from your comfort rat hole to accept either partnership or sell shares to people. Because, people will approach you for partnership, and if you refuse, then the government will force you to give out shares.
A limited partnership, or LP, is an off-shoot version of a general partnership. And while it may not be as common, it’s a great bet for businesses who are looking to raise capital from investors. Particularly, when investors aren’t interested in working the day to day aspects of the business operations. With a limited partnership, there are two sets of partners: The General Partner and the Limited Partner.
The general partner is usually involved in the everyday business decisions, and has personal liability for the business. On the other hand, there’s also a limited partner (typically an investor). This Limited Investor is not liable for debts and don’t partake in regular business management of the company. Just like a general partnership, in Limited Partnership agreement, you will need some legal documentation. You’ll need to register your business with the state, establish a business name, and inform the IRS of your new business. Again, this option is the most common for those looking for investment dollars. You have to keep that in mind when exploring your partnership options.
A corporation is a fully independent business. It is made up of multiple shareholders who are provided with stock in the business. Most common is what’s known as a “C Corporation,”. It allows your business to deduct taxes much like an individual. The only problem with this is that your profits will be taxed twice, both at the corporate level and at the personal level.
Don’t let this fact deter you, however – this is extremely common. And, if you currently work for a company with multiple employees, that’s likely the business structure they’re using. Most likely, if you’re starting off as a smaller business, declaring yourself as a corporation wouldn’t be appropriate. However, if you’re already an established business with several employees, listing your company as a corporation might be okay. You’ll need to file very specific documents with the state, followed by obtaining the appropriate business licenses and permits.
A limited partnership is an off-shoot of a general partnership business. This business is not common. However, it is a business type for fundraising from investors who do not work their asses up but support the growth financially.
Limited partnership has two sets of partners: The General Partner and the Limited Partner. The General partner are actually the people running the business. Whereas, the limited partners who ain’t liable for debts and don’t partake in regular business management of the company. However, this investors contribute financial wise.
The financial obligations that apply to Partnership type of business, still apply to a Limited Partnership. You will still fund partnership agreement, register your business with the state. In addition, you must own or establish a business name, and inform the IRS of your new business.
If you are looking for investment dollars, this business type is your calling also.
If you are a stingy person, stay away from this type of business, and explore some other types of businesses. It is not a business venture for the stingy.So choose from other business types that I have explained in this article. A nonprofit organization is a business organization that its goal and inclination is the promotion of charity.
How Nonprofit organisation type of business operates
In nonprofit organization business, any profit earned is kept for charitable courses. Like I stated above, if you are the stingy type, stay away from Nonprofit Organizations.
This business type is a direct opposite of Nonprofit Organization. It is a business that is fully owned and operated for the benefit of the all (full) members of the organization.
In other words, the stakeholders share equally among them whatever is earned by the cooperative.
Unlike other types of businesses, which have shareholders, cooperatives sell shares to members of the public. These willing members of the public are called Cooperative “Members,” .
After buying of shares then they will have a say in the operations and direction of the cooperative itself.
What set Cooperative apart from other type of businesses are the creation bylaws, having a membership application, and equally having a board of directors with a charter member meeting.
As far as online business ventures exist, Cooperative is not always heard of. Although, online cooperatives do exist.
Once you have chosen a business type that suits you intent, and character, endeavor to create a website for it. It is high time you understood that the Word is now a global village. Do not limit yourself to your locality. Go online, and get discovered so as to make money for yourself, and live the boss live you have been longing for.
Quick note: There exist other types of businesses. However, these seven listed here on this article, are the most popular and common in the society today.
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