Forms of Business Ownerships

Introduction to common forms of Business Organizations

Business organizations are entities that engage in economic activities such as production, distribution, and exchange of goods and services. They are formed by individuals or groups of people who share a common goal and vision. There are different types of business organizations that vary in their legal structure, ownership, management, and operation. 

Business ownership refers to the legal right and authority to own and control a business. It also determines the extent of risk and reward that the owners face in the business. There are different forms of business ownership that suit different types of business organizations. 

Some of the common forms of business ownership are:

Sole trading concern: This is a business that is owned and run by a single person who has full control and responsibility over the business. The owner is also liable for all the debts and obligations of the business. A sole trading concern is easy to start and dissolve, but it has limited resources and growth potential.

Partnership firm: This is a business that is owned and managed by two or more people who agree to share the profits and losses of the business. The partners have unlimited liability for the debts and obligations of the firm. A partnership firm can benefit from the skills and resources of the partners, but it may also face conflicts and disagreements among them.

Joint stock company/ Corporation: This is a business that is owned by shareholders who invest money in the company and have limited liability for the debts and obligations of the company. The company is managed by a board of directors who are elected by the shareholders. A joint stock company can raise large amounts of capital and expand its operations, but it also has to comply with various legal and regulatory requirements.

Multinational companies: These are companies that operate in more than one country and have a global presence and influence. They have a centralized management and a decentralized operation. They can take advantage of the different markets and resources of the countries they operate in, but they also have to deal with the cultural and political differences and challenges of those countries.

Cooperatives: This is a special form of business ownership that is based on the principles of democracy and solidarity. It is when a business is owned and controlled by its members who have a common interest and goal. The members share the profits and losses of the business and participate in the decision-making process. A cooperative can foster social and economic development and empowerment of its members, but it may also face difficulties in coordination and efficiency.

Limited liability company (LLC): This is a hybrid form of business ownership that combines the features of a corporation and a partnership. It is when a business is registered as a separate legal entity that is owned by members who can be individuals or other entities. The members have limited liability for the debts and obligations of the business, but they can also participate in the management and operation of the business. 

An LLC can enjoy the flexibility and tax benefits of a partnership, but it also has to follow some rules and regulations of a corporation.