Types of Business Organizations

Sole Proprietorships

A sole proprieter has a single owner, who takes all the risk and recieves all the profits.

Ex: Living alone

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A partnership divides the risks and profits of a business among two or more people.

Ex: barbershop

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A corporation issues shares of stock to investors.

Ex: Mcdonalds

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Limited Liability

Definition: situation in which a shareholder is not responsible for a corporation's debts

Unlimited Liability

situation in which a business owner is responsible for all the business's debts


Shares of ownership in a corporation


A shareholder's share of a corporation's profits

Board of Directors

People who are elected by shareholders to run a corporation

Most Common Type of Business

The most common type of business is a sole proprietorship.A sole proprietorship is a business venture with only one owner. Professionals, retailers and service providers can be sole proprietors. Sole proprietorships have no separate legal standing; the business is the owner and vice versa. Although this fact means that sole proprietors are liable for any debts incurred by the business or judgments against the business, many consider the benefits to outweigh the disadvantages. The major advantages that make sole proprietorships the most common form of business ownership revolve around simplicity and economics