Three Primary Classifications of Businesses
We can classify businesses into following three types
1: Sole Proprietorship
2: Partnership
3: Corporation
Explanation of the Differences Among Them
Sole Proprietorship
It is also known as the sole ownership, it is run by one single person who works as the owner, this type does not fall under any legal entity title. It is most simplest form of business where one man, the owner bears all the profits, losses and responsibilities like local grocery corner shop etc.
Partnership
Here in partnership, there are two or more than two persons who open a businesses on profit and loss sharing basis which could be different as per their agreement. They all are equally responsible for the responsibilities and liabilities of that business.
Corporation
Corporation can defined as a legal entity which has nothing to do with owners, it is totally a separated being from its owners. It has its own liability, functions and rules. Corporation can sign any contract by its own even without interference from its owners. It has board of governors who basically run them independently. Walmart, Apple, Microsoft, Samsung, Nokia are the best examples of Corporation
Therefore, these are basic differences between these three primary types of businesses.
