A business (also called a company, enterprise or firm) is a legally recognized

organization designed to provide goods and/or services to consumers.[1] Businesses are

predominant in capitalist economies, most being privately owned and formed to earn
profit that will increase the wealth of its owners and grow the business itself. The owners
and operators of a business have as one of their main objectives the receipt or generation
of a financial return in exchange for work and acceptance of risk. Notable exceptions
include cooperative enterprises and state-owned enterprises. Businesses can also be
formed not-for-profit or be state-owned.

The etymology of "business" relates to the state of being busy either as an individual or
society as a whole, doing commercially viable and profitable work. The term "business"
has at least three usages, depending on the scope — the singular usage (above) to mean a
particular company or corporation, the generalized usage to refer to a particular market
sector, such as "the music business" and compound forms such as agribusiness, or the
broadest meaning to include all activity by the community of suppliers of goods and
services. However, the exact definition of business, like much else in the philosophy of
business, is a matter of debate and complexity of meanings

Basic forms of ownership

Although forms of business ownership vary by jurisdiction, there are several common
forms:

• Sole proprietorship: A sole proprietorship is a business owned by one person.

The owner may operate on his or her own or may employ others. The owner of
the business has personal liability of the debts incurred by the business.
• Partnership: A partnership is a form of business in which two or more people
operate for the common goal which is often making profit. In most forms of
partnerships, each partner has personal liability of the debts incurred by the
business. There are three typical classifications of partnerships: general
partnerships, limited partnerships, and limited liability partnerships.
• Corporation: A corporation is either a limited or unlimited liability entity that
has a separate legal personality from its members. A corporation can be organized
for-profit or not-for-profit. A corporation is owned by multiple shareholders and
is overseen by a board of directors, which hires the business's managerial staff. In
addition to privately-owned corporate models, there are state-owned corporate
models.
• Cooperative: Often referred to as a "co-op", a cooperative is a limited liability
entity that can organize for-profit or not-for-profit. A cooperative differs from a
corporation in that it has members, as opposed to shareholders, who share
decision-making authority. Cooperatives are typically classified as either
consumer cooperatives or worker cooperatives. Cooperatives are fundamental to
the ideology of economic democracy.

For a country-by-country listing of legally recognized business forms, see Types of

business entity.
There are many types of businesses, and because of this, businesses are classified in
many ways. One of the most common focuses on the primary profit-generating activities
of a business:

• Agriculture and mining businesses are concerned with the production of raw
material, such as plants or minerals.
• Financial businesses include banks and other companies that generate profit
through investment and management of capital.
• Information businesses generate profits primarily from the resale of intellectual
property and include movie studios, publishers and packaged software companies.
• Manufacturers produce products, from raw materials or component parts, which
they then sell at a profit. Companies that make physical goods, such as cars or
pipes, are considered manufacturers.
• Real estate businesses generate profit from the selling, renting, and development
of properties, homes, and buildings.
• Retailers and Distributors act as middle-men in getting goods produced by
manufacturers to the intended consumer, generating a profit as a result of
providing sales or distribution services. Most consumer-oriented stores and
catalogue companies are distributors or retailers. See also: Franchising
• Service businesses offer intangible goods or services and typically generate a
profit by charging for labor or other services provided to government, other
businesses or consumers. Organizations ranging from house decorators to
consulting firms to restaurants and even to entertainers are types of service
businesses.
• Transportation businesses deliver goods and individuals from location to location,
generating a profit on the transportation costs
• Utilities produce public services, such as heat, electricity, or sewage treatment,
and are usually government chartered.

Sole Proprietorship

A sole proprietorship is the least expensive and easiest way to start your business. What
is simpler than finding a location for your business and opening the doors? All right, I
might have oversimplified it there, but it really is pretty easy. You will have to register a
business name and obtain other local licenses which will depend on your local
government. There will also be fees associated with obtaining them. Hiring an attorney
would be a smart move and the attorney fees will be less than other forms of business as
there is a smaller amount of documents to be filed because the owner of the business has
the final word in all business decisions.

Partnership

The thing with partnerships is that there are several different types. The two most
common types of partnerships are limited partnerships and general partnerships. Two or
more people can form a general partnership through a simple oral agreement. Starting a
partnership with an oral agreement is not recommended, you should get legal documents
drawn up by an attorney. You can expect the fees for this to be higher than a sole
proprietorship, but they should be less than what you would expect for incorporating. A
large benefit for having a legal partnership drawn up is it will aid you in resolving any
future business disputes. A down side to a partnership is that a partner can be held
responsible for the actions of other partners in the business in addition to their own
actions.

Some of the things included in a partnership agreement:

• The compensation for partners.

• How long will the partnership last.
• How will the profits or losses be divided?
• What type of business is it?
• What is each partner investing into the business?
• If the partnership dissolves how will assets be distributed?
• A settlement clause for disputes.
• Provisions for dissolution of the partnership.
• Provisions for future changes to the partnership.
• Define any restrictions to expenditures or authority.
• Provisions for death or incapacity.

Corporation

Incorporating your business does not require that you have an attorney, however it is
highly recommended. The structure of a corporation is complex. It is more expensive to
organize it than the other two business entities. Corporate control lies with the person
who has ownership of the most shares of stock. If a single stockholder or a group of
stockholders own at least 51% of the stock they can make decisions of policy.
Corporations will have annual meetings of stockholders and regularly scheduled meetings
for the board of directors with records kept to document their decisions. The size of the
corporation will affect how formally or informally it can operate. Smaller corporations
might operate less formally, but still need to keep proper documentation. Stockholders
can hold officers of corporations liable for any actions which might have been improper.
In those kinds of cases stock ownership is generally where the liability is limited to
unless there was a fraud committed. An attorney can help you decide to incorporate as
either a C or S type corporation.

What is a Sole Trader?

A sole trader is an unincorporated business, i.e. one not registered with Companies
House.

They usually have one owner who will run and work in the business on a day to day
basis.
A sole trader is not a company.

Assets and Liabilities of a Sole Trader

Sole traders are not seen within the law as separate from the person or people who own
the business as is the case with a limited company.

The assets and liabilities of a sole trader are therefore seen as those of the person owning
and running the business.

This not only effects the way in which the business is taxed, but also the level of
exposure of the owner has to the business' debts.

The debts of the business become the liabilities of the owner whose personal property can
be sought should the unincorporated enterprise be unable to pay.

Regulations of a Sole Trader

Sole traders do enjoy fewer formalities and regulations compared to those imposed on a
company.

There is no annual return to complete, no statutory records to maintain, no statutory

accounts to prepare and no separate corporation tax return to submit. Each of these can
produce cost savings to the business and therefore its owner.

Starting a Business as a Sole Trader

Starting business as a sole trader has very few requirements. There is certainly no
requirement to inform Companies House (who only form and regulate companies).
Revenue and Customs should usually be contacted for the purpose of notifying them that
the person will now receive income from self employment (on which they will pay
income tax).
Partnerships

What is a Partnership?

A partnership is where two or more people come together to carry on a business, trade
or other activity. There are two forms of partnership in the UK, traditional unincorporated
partnerships and limited liability partnerships (LLP).

The legal status of a traditional partnership is similar to that a sole trader but instead of
having one owner, there are two or more proprietors involved in running the business,
each having a stake in the ownership of the that entity.

Limited Liability Partnerships vs. a Traditional Partnership

A Limited liability partnership is different from a traditional one.LLPs are

incorporated at Companies House, have a registered office and as their name suggests,
enjoy the protections of limited liability.

The document will focus on traditional partnerships.

Unincorporated Businesses

As is the case with a sole trader, a partnership is an unincorporated business. It is not

(neither is it required to be) registered at Companies House and has no obligations to
maintain statutory records, prepare and file statutory accounts or to submit an annual
return to the Registrar of Companies.

This kind of partnership structure is usually found within firms of solicitors, surveyors
and accountants; although in recent years some practices within these professions have
changed their status to an LLP.