Types of Business Ownership.

1. Sole Proprietorship

A sole proprietorship is the most basic form of business ownership, where there is one sole
owner who is responsible for the business. It is not a legal entity that separates the owner
from the business, meaning that the owner is responsible for all of the debts and obligations
of the business on a personal level. In exchange for that liability, the owner keeps all the
profits gained from the business. This form of business ownership is easy and inexpensive to
create and has few government regulations, making it a more flexible type of ownership with
complete control at the discretion of the owner. In addition, profits are taxed once, and there
are some tax breaks available if the business is struggling. Sole proprietorships often are
limited to the resources the owner can bring to the business. For these reasons, sole
proprietorships are often most appropriate during the early stages of a business where the
owner has little capital/resources to work with but also has few debts to pay.

2. Corporation

A lesser known ownership style, an S corporation is a type of business ownership that allows
its owners to avoid double taxation because the organization is not required to pay
corporation taxes. Instead, all profits or losses are passed on to owners of the organization to
report on their personal income tax. This form of ownership does allow for limited liability,
similar to a corporation, but without the double taxation. The disadvantages of this
organization’s special nature is the increased level of government regulations and the
restrictions on the number and type of shareholders it may have. This type of ownership is
used in the mature stage of a business lifecycle and often by private organizations due to the
restrictions on ownership.
 3. Partnership.

Partnerships are a form of business ownership where two or more people act as co-owners.
There are two forms of partnerships, which are General Partnerships and Limited
partnerships, differentiated primarily by the liability coverage by the owners. In a general
partnership, all owners of the business have an unlimited liability in the business (the same
as a Sole Proprietorship). For a limited partnership, at least one of the partners has a limited
liability, meaning they are not personally responsible for the debts of the business. Regardless
of the type of partnership, they are relatively easy and cheap to create, have few government
regulations and are only taxed once, like a sole proprietorship. The added benefit of a
partnership is the combination of knowledge and resources that are brought to the table
thanks to the additional owners. Profits do have to be shared between owners and there is
always the potential for conflicts to arise between partners over business decisions. This type
of ownership is often useful in the early stages of the business where multiple people are
involved. Due to the sharing of profits and the additional resources, this type of ownership is
often expected to yield higher growth rates then a sole proprietorship.

4. Co-operative

Cooperatives are organizations that are owned and controlled by an association of members.
This form of ownership allows for a more democratic approach to control where each share
is worth the same amount of votes, similar to a corporation with common stock. It also offers
limited liability to its owners and equal profit distribution based on ownership percentage.
Disappointingly, the democratic approach to decision making results in a longer decision
making process as participation from all association members is required. Conflicts between
members can also arise that can have a big impact on the efficiency of the business. Co-
operatives are often used when individuals or businesses decide to pool resources to achieve
a common goal or satisfy a common need, such as employment needs or a delivery service.