The Three Main Types

of Business Organizations

Three types of Organizations

Sole Proprietorship- A person who owns the business and is responsible for it's debts

[Example: Home Healthcare]

Partnership- a relationship existing between two or more people who join together to carry on a trade or business; each person contributes money labor skills and property and share their profits

[Example: Apple Inc.]

Corporation- an independent business owned by shareholders however , when the business goes into debt the shareholders are not in debt but the corporation is.

[Example: Wal-Mart]


*Limited Liability- a type of investment where a partner investor cannot lose more than the amount invested. In other words,the partner or investor is not responsible for debts and such.

*Unlimited liability- an investment where the investor or partner can lose an unlimited amounts of money because they are responsible for all the debts, bills ,etc.

*stock- a share of a company held by an individual or group: used by corporations to raise capital.

*dividend- a taxable payment decided by a company's board of directors and given to their share holders out of the company's current or retained earnings, usually quarterly.

*Board of directors- also known as directorate. Individuals elected by a corporation's shareholder to oversee the management of the corporation.

What business is most common?

There are three main types of business organizations; Sole Proprietorship, Partnership, and Corporation. Of these three organizations , the most common is Sole Proprietorship. This is the most common because the owner has complete jurisdiction over the company , can have heirs, and can even sell the company when they please. In addition, there aren't any specific business taxes paid by the company, the owner pays on income tax from the business as part of personal income tax payments.