Swaynee N.

Abdon ABM 12B

''DEFINE THE 4 FORMS OF BUSINESS"

Sole Proprietorship
A sole proprietorship is an unincorporated company that is owned by one individual only. While it is
the most simple of the types of businesses, it also offers the least amount of financial and legal
protection for the owner. Unlike partnerships or corporations, sole proprietorships do not create a
separate legal identity for the business. Essentially, the owner of the business shares the same
identity as the company. Therefore, the owner is fully liable for any and all liabilities incurred by the
company.

Partnership
As the name states, a partnership is a business owned by two or more people, known as
partners. Like sole proprietorships, partnerships are able to take advantage of flow-
through taxation. This means that the income is treated as the owners’ incomes so it is only
taxed once. Owners in partnerships are responsible for the liabilities of the firm. However,
there are some nuances to this. There are different types of partnerships: general
partnerships, limited partnerships, and limited liability partnerships.

Corporation
Corporations are a separate legal entity created by shareholders. Incorporating a business
protects owners from being personally liable for the company’s debts or legal disputes. A
corporation is more complicated to create, as compared to the other three types of
businesses. Articles of incorporation must be drafted, which include information such as
the number of shares to be issued, the name and location of the business, and the purpose
of the business.

Cooperative
A cooperative business (or co-op) is a private business or organization that is owned and
managed by member-owners who benefit from its goods or services. It exists to fulfill a
common need of its member-owners such as improved services or access to unobtainable
supplies. Member-owners can be individuals, businesses, or other groups who join
voluntarily and are willing to work toward a shared goal.