The different types of organizations include sole proprietorship, partnership, corporation, limited liability company and cooperative. Organization type is determined by the form of ownership, the owners’ legal liability and their income tax arrangement.
Sole proprietorship organization is a form of business owned by a single individual. This is the most basic and easiest type of organization to set up. The owner of a sole proprietor company has unlimited liability, implying that creditors can collect his personal assets in case of payment default. A partnership, on the other hand, is a business owned by a minimum of two people who jointly pull the resources into the investment.
A corporation is a form of business that has a distinct legal personality from its owners. The people with shares (known as stockholders) are the owners of the corporation, but they have limited involvement in the running of the company. Unlike in sole proprietorship and partnership, corporation owners enjoy limited liability. A cooperative is a form of organization owned by a group of people for their mutual benefit. Finally, a limited liability company is a hybrid of corporation and partnership.
An organization is generally an organized group of people with a specified purpose. Organizations are essentially businesses, societies or associations. All organizations have a management structure that defines relationships between the various operations and the members. The structure also spells out the roles and duties assigned to each member, and the authority to perform certain functions.