There are three main types of business.
- Sole proprietorship.
Single person handle business in this type of business. He is also solely owner of the business. There are different types of advantages and disadvantages in the sole proprietorship.
Single person is owner of the business.
Single person enjoys the income of the business.
Fast decision making because decision is taken by single person.
More control on the daily working.
Single person is responsible for all losses of business.
Two or more than two persons combined together to run the business with a view to earn profit is known as partnership. To form a valid partnership objective of the partner should be of earning profit. There are two types of partnerships. One is Simple partnership and other is limited liability partnership. Liability is different in both kinds of partnerships.
More than one person is responsible for losses.
Decision is taken carefully.
Lack of skills.
Slow decision making.
Still all partners are personally liable in case of insolvency.
Company is different concept from above two. Owners are different from company. Shareholders are the owner of the company and they appoint directors to run the business. There are two types of companies. One is private limited company and second is public limited company.
Shareholders have limited liability.
Skills are available in the shape of good managers.
Shareholders cannot participate in the affairs of company.