What Are the Different Types of Business Organizations?
The different types of business organizations include partnership, sole proprietorship, limited liability company and corporation. Specific advantages and disadvantages come with each type of organization, and an experienced business attorney can help an individual decide which organization is best for his business.
The two types of partnership include general partnership and limited liability partnership. Each business owner is responsible for any debts or lawsuits that arise in a general partnership while they take no responsibility for business lawsuits and debts in a limited liability partnership. Partnerships are one of the most affordable partnerships to form, and they make taxes easier as well.
Businesses in which there is only one owner may be better off operating as a sole proprietorship. This type of organization makes doing taxes easy, and the owner doesn't have to worry about corporate taxes. Limited liability companies may be preferable to forming a corporation. Owner assets are safeguarded from debts and legal action.
The two types of corporation include C and S corporations. C corporations are double-taxed, and taxes have to be paid by the corporation as well as all shareholders. There is only a single tax for S corporations, and shareholders handle business expenses and taxes. The number of shareholders an S corporation can have is limited while the number for a C corporation has no such restraints.