15 November The Types of Business Introduction Businesses are the backbone ofthe economic strength of a country. They play a fundamental role in a country’s economic growth and consequently, advancement in all other areas as well. Businesses are either online or brick-and-mortar or both. A business can be classified into different types depending upon the ownership and financing of business e.g. sole proprietorship, partnership, corporation and miscellaneous businesses.
Sole proprietorship means running a business as an individual. “A sole proprietorship is an unincorporated business owned by one person (hence, the term sole). The owner of a sole proprietorship is known as a sole proprietor” (“Doing Business”). Sole proprietorship accounts for 74 per cent of all businesses in the USA and their sales make up to 6 per cent of the total (“Chapter 9 – Types of Business”). There has to be no sharing of the ownership, though the number of employees can be very large as per the wish of the owner. There is no difference between the business and the owner as per the law. The individual may establish the business with a trade name or in his/her own name, but he/she can not use a corporation to run the business anyway, or it would be no more a sole proprietorship. Sole proprietorship has many advantages and disadvantages, all of which fundamentally stem from the fact that the owner and the business are one and the same entity in the eyes of the law. The first advantage of the sole proprietorship is that there is no application of double tax. The second advantage of the sole proprietorship is that it enables the individual to have a reduction in the amount of losses which in turn reduces the total burden of the income tax upon the family, particularly when the sole proprietor is married and has filed a joint tax return (“Doing Business”). Establishing a sole proprietorship is cost effective and easy (Ward). The disadvantages of sole proprietorship include application of complete