The word business often refers to a corporation or organized entity acting for the benefit of another individual or group. Such organizations may be labor unions, partnerships, corporate organizations, nonprofits, or other governmental bodies. Businesses may be either for profit entities or non profit organizations that work to meet a social cause or further an educational purpose. Business enterprises may be public or private and have their own distinct characteristics and processes. In addition, the size of a business also significantly influences its ability to succeed, as well as the degree to which it can impact society.
Types of businesses vary greatly and include privately held for profit companies, publicly traded corporations, partnerships, and corporations that are formally listed. A publicly traded corporation is one in which all of the stock shares are traded publicly through the company’s stock exchange. Often, when a corporation becomes publicly traded it reverts to being classified as an unincorporated business. This occurs when the corporation is able to raise enough capital from investors to service the debts of the business.
Some types of businesses are much more complicated than others. For instance, businesses that are classified as partnerships are relationships between two or more people who usually control a substantial share of the company. Examples of successful partnerships include entertainment properties (such as theaters and restaurants) and franchise chains. Private equity firms may invest in many types of publicly traded corporations and partnerships. All businesses are complex to some degree, but this article focuses on businesses that affect the day-to-day lives of most people.
Corporations are run by a single board of directors elected by the shareholders. However, unlike partnerships, corporations are not operated by shareholders. Instead, a corporation is run by a corporation lawyer, certified public accountant, and other officers selected by the board of directors. A corporation is not required to pay taxes on its profits unless they have reached certain annual revenues. This is because the majority of US corporations are classified as non-for profit entities. Corporations can also form corporations for the purpose of sharing profits or assets with certain family members or other individuals.
Forming a limited partnership is a way for two or more people to share profits and assets without having to form a separate entity from the rest of the business. Similar to corporations, partners in a limited partnership receive one vote as a majority in the partnership’s shareholders. There are many business types that fall into the limited partnership classification, such as limited liability partnerships (LLPs), limited liability partnerships (LLP), and corporation. In addition to limited partnership businesses, there are also general partnership and proprietorship that fall under this business type. Many types of partnerships offer different benefits to investors, depending on the type of partnership and the investment opportunity.
Limited partnerships can be a great option for growing small business. Because of the ease in forming these business types and the simplicity of the partnership papers, many investors prefer to invest in these types of partnerships. This paper work is considerably less than what it would take to start and maintain a corporation, and less than half of what it would take to start an original small business. Limited partnerships also allow the investor to control a large portion of the partnership that represents a greater asset base than could be gained through the purchase of equity shares in a corporation. The paperwork involved with these types of partnerships is generally straightforward, making them easy to get established and operate.