Types of Business Sructure
Types of Business Sructure
- Admin
- Dec 12, 2022
- Office
- Sole Proprietorship
- Partnership
- Limited Liability Partnership (LLP)
- Corporation
Sole Proprietorship
Sole Proprietorship is a business entity owned and operated by one person. It is the simplest and most common form of business ownership. Sole proprietorship have complete control over their business, but they are also personally liable for all debts and liabilities.
Partnership
Partnership is a business entity owned and operated by two or more people. Partners share the profits and losses of the business, and they are jointly and severally liable for debts and liabilities. This means that each partner can be held personally responsible for all of the businesse’s debts and liabilities even if they were caused by another partner.
Limited Liability Partnership (LLP)
LLP is a hybrid business entity that combines the features of a partnership with the limited liability
protection of a company. This means that partners in an LLP have limited liability for debts and liabilities,
but they still retain the flexibility and control of a partnership.
Corporation
A corporate is a legal entity that is separate from its owners. This means that the corporation has its own rights and responsibilities, and the owners are not personally liable for the corporation's debts.
| Features | Sole Proprietorship | Partnership | LLP | Corporation |
|---|---|---|---|---|
| Number of Owners | 1 | 2 or more | 2 or more | 1 or more |
| Personal Liability | Unlimited | Unlimited | Limited | Limited |
| Legal Entity | No | No | Yes | Yes |
| Legal Entity | No | No | Yes | Yes |
| Management | Owner-Managed | Partner-Managed | Partner-Managed | Managed by a board of Directors |
| Ease of Setup | Easiest | Easy | More Complex | Difficult |
| Taxation | Pass-through | Pass-through | Pass-through | Double Taxation |
| Advantages | Simple and easy to set up, owner has complete control. | More resources and expertise, owners can share the workload | Limited Liability; Separate Legal Entity from the owners. | Limited Liability |
About Author
Vikas Singh (B.Sc, MBA, LLM)
Co-founder of Aiws Accountech
Vikas is dedicated to sharing insights and expertise from the journey at Aiws Accountech.
