7 Most Popular Types of Businesses

  Want to start your own business? Congratulations! You are doing something big-entrepreneurs like you are driving the economy. To help you ...

 

Want to start your own business? Congratulations! You are doing something big-entrepreneurs like you are driving the economy. To help you get started, we will explain the seven most common business types. If you are starting your own business, you need to develop a business plan to help you better outline your goals before committing to one of the following business types.

What type of business should you start?

One of the first challenges facing new entrepreneurs is deciding what type of business they should register. Although there are several different types of enterprises, it is not difficult to choose one. Here are the seven most commonly used business types and some questions to help you choose the type of business that suits your startup company:

• Sole proprietorship: the simplest type of business. A sole proprietorship is owned and operated by one person and is very easy to establish.
• Partnership: A business owned by two or more people who share the responsibilities and profits.
• Limited partnership: A business partnership, usually between the operator and the investor.
• Company: A company that is completely independent from its shareholders. One of the most complex business types.
• Limited Liability Company (LLC): A hybrid of partnerships and companies designed to make it easier to start a small business. One of the most popular business types for startups.
• Non-profit organization: An enterprise that uses profits for charitable purposes. Tax exemption, but special regulations must be followed.
• Co-op: A company owned and operated for the benefit of the members of the organization using its services.

Decisions you'll need to make when choosing a business type:

• Debt and liability: Most small businesses and start-ups regard personal liability associated with sole proprietorships or partnerships as necessary risks for conducting business. If you are in a high-risk industry (such as selling CBD or guns online), or just want to keep your business and personal affairs confidential, you can limit your personal liability by applying for a more formal business structure. The downside is that compared to simple business types, this usually requires more paperwork, higher registration costs, and may have higher reporting or maintenance requirements.
• Tax filing: In order to simplify a little, you have two options when filing taxes. You can file business profits/expenses in your own personal tax return, or you can file taxes separately for your business as your own entity. Most small business owners prefer to simply file taxes on their returns, but filing taxes separately can help you stay personal and business
• Financial separation.
• Partners or investors: If you start a business with a partner or private investor, you will not be able to form a sole proprietorship. You can choose a partnership (equal sharing of all responsibilities and obligations), a limited partnership (allowing you to specify the responsibilities and obligations of individual members), or a limited liability company (protecting all members from personal liability).
• Hiring employees: Some of the simplest types of businesses—such as sole proprietorships—may find it difficult to hire employees. Although you can change your business type to grow as your business develops, if you already have employees or plan to hire employees, it is best to use a more formal business structure (such as a limited liability company or company) to accommodate future development.
• Are you starting a business for profit or to help a cause?If you only care about helping others and don’t operate for profit, forming a non-profit organization can give you tax-exempt status—although it requires a lot of paperwork.
• Will your company be owned and operated by its members in a democratic manner without a single owner? Known as "cooperatives", this type of business is rare.

After you have answered these questions and decided which type of business is best for your startup, the next steps depend on your state and local laws and regulations, because you may need to fill in specific information for your location and type Other forms of business. There are many books and resources that can be used for this. Many of them recommend starting from the Small Business Association, as they have offices in the local area. Finally, check your local and state laws regarding doing business outside of your home, as zoning laws can sometimes be an important factor in deciding which type of business you want to create.

Most Popular Business Types

• Sole proprietorship
• Sole proprietorships are the most common type of online business because they are simple and easy to create. A sole proprietorship is an enterprise owned and operated by one person and does not require registration. If you are operating a single-person business, you will automatically be regarded as a sole proprietor by the government. However, depending on your product and location, you may need to register a local business license in your city or state.

The important thing to note is that there is no legal or financial difference between a business and a business owner. This means that you, as a business owner, are responsible for all profits, liabilities, and legal issues that your business may encounter-as long as you pay the bills and maintain honest business practices, there will usually be no problems. If you start an e-commerce business on your own, a sole proprietorship may be the best type of business for you. If you are doing business with one or more partners, please keep reading!

Partnerships

Two heads are better than one, right? If you want to start a business with other people, a partnership may be the right choice. Partnerships provide many benefits-you can share resources and knowledge with another person, get private funds, and so on. Remember, in a partnership, responsibilities and obligations are divided equally among each member. However, there are many types of partnerships (such as the limited partnerships discussed in the following paragraphs) that allow you to define the roles, responsibilities, and responsibilities of each member.

Partnerships do require you to register your business in your state and establish an official business name. After that, you will need to obtain a business license and any other documents that the state office can help you with. In addition, for tax purposes, you also need to register your business with the IRS. Although this may seem a complicated process, partnerships have many benefits, so if you wish to have a co-owner, don't be afraid, as many online companies are formed through partnerships. Someone helping to share the work of starting a new business is definitely worth the extra paperwork.

Limited partnership

A limited partnership or LP is a branch version of a general partnership. Although it may not be so common, it is a good choice for companies looking to raise funds from investors who are not interested in day-to-day operations. A limited partnership has two groups of partners: general partners and limited partners. General partners usually participate in day-to-day business decisions and assume personal responsibility for the business. On the other hand, there is also a limited partner (usually an investor) who is not liable for debts and does not participate in the company's regular business management. Just like a general partnership, if you sign a limited partnership agreement, you need to register your business with the state government, establish a business name, and inform the IRS of your new business. Again, this option is the most common for those seeking investment funds, so keep this in mind when exploring your partner options.

Corporation

The company is a completely independent company composed of multiple shareholders who have acquired shares in the company. The most common is the so-called "C company", which allows your business to deduct taxes like an individual-the only problem is that your profits will be taxed twice at the company level and the individual level. But don’t let this fact scare you—it’s very common, and if you’re currently working for a company with multiple employees, this is most likely the business structure they’re using. If you are a smaller business (especially one that only operates online), it is not appropriate to declare yourself as a company. However, if you are already a mature business with multiple employees, then listing your company as a company may be the right approach. You need to submit very specific documents to the state government, and then obtain the corresponding business license and permit.

Limited Liability Company (LLC)

The next in our list of business types is a limited liability company, better known as a limited liability company. A limited liability company is a relatively new type of business. It is a hybrid between a partnership and a company. LLC owners are called members, not shareholders. Regardless of the number of members in a particular limited liability company, there must be a management member responsible for day-to-day business operations. The main difference between a limited liability company and a company is that a limited liability company is not taxed as an independent business entity. Instead, all profits and losses are transferred from the business to the LLC members, who report the profits and losses on individual federal tax returns.

Nonprofit Organization

A non-profit organization is self-explanatory because it is a commercial organization that promotes educational or charitable purposes. The role of "non-profit" is that any money the company earns must be retained by the organization to cover its expenses, plans, etc. Keep in mind that there are several types of non-profit organizations available, many of which can obtain "tax-exempt" status. This process requires the submission of paperwork, including an application, to the government so that they can recognize you as a non-profit organization. Based on the parameters of your new business, they will be able to tell you which category you are most suitable for.

Cooperative

The last on our list is the so-called cooperative or a company that is fully owned and operated for the benefit of the members of the organization that uses its services. In other words, any income earned by the cooperative is shared among members and does not need to be paid to any external stakeholders, etc. Unlike other types of companies that have shareholders, cooperatives sell their shares to cooperative "members," and then they have a say in the operation and direction of the cooperative itself. Compared with other types of companies listed, the process of becoming a cooperative is The main difference is that your organization must develop a charter, submit a membership application, and have a board of directors, and hold a chartered member meeting. This is one of the least common types of online business, although online cooperatives do exist, such as outdoor goods store REI .

There are a number of good resources that cover the intricacies of starting a co-op, such as this one.

Reference: https://www.volusion.com/blog/business-types/