Types of Different Business Structures

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When you decide to finally decide to register your business. You can get overwhelmed and confused with the choices which are available to you as a business owner. So, to help you with that, we will have a look at different business structures which exist.

Now we have grouped all the structures into two main categories, which are incorporated and unincorporated business types. Which pretty much self-explain what they mean. So, let us begin.

Unincorporated Business Structures

Sole Proprietorship

The most basic business structure, Sole Proprietorship means a business owned by a single guy. Businesses under this structure may vary in size from a roadside stall to a very large organization. While this puts the owner completely in charge of the business and all related decisions, there are certain downsides to it too. As there is no other legal entity involved win the business, the owner is completely responsible for the business’s tax and debt liability.


As the name suggests, this business structure places the ownership in the hands of several members or “partners”. These partners could be individuals, corporations or trusts. This structure of business ownership has certain advantages over sole proprietorship, one being that all the debts, liabilities and the income is shared amongst the partners. While setting up a business in partnership with multiple legal entities is easier due to the pooling in of assets, it too faces certain downsides. One of the partners may take a decision that is not in the best interest of the business or the other partners may not agree with it.

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Incorporated Business Structures

Joint Venture

Quite similar to a partnership, a joint venture means two or more entities coming together to form a single one in order to undertake economical activities. The two or more entities pool in their resources and the revenue, expenses and the control of the resulting entity is then shared by them. Joint ventures may last for a certain project or may continue for long periods. For example, Sony Ericson.

Limited Partnership

A limited partnership involves one or more limited partners and one or more general partners coming together to form a separate legal entity. While the general partners are involved in the daily operations and take care of the debts involved, the limited partners are concerned only with investing capital in the partnership at the time of establishment and thereon share the profits.

Limited Liability Company

A limited liability company, or “LLC” as is commonly referred to is a business structure that allows for several “members” or owners to own the business with a “Managing Member” being elected who is the face figure of the organization and represents the common interest of all the members. One of the many advantages of an LLC-structured business is that the business’s revenue passes on directly to the member’s personal income tax returns.

C Corporation

A “C corporation” business structure allows a bigger legal entity to create a totally separate legal entity that operates on its own. A C corporation performs independently and can engage in business, make legal commitments, have its own credit identity, have its own separate bank account and even acquire and sell assets on its own. The C corporation business structure has a unique advantage that the owners or the “Shareholders” of the corporation are shielded from any liability on the part of the corporation. They are not to be held responsible for any legal liability on part of the corporation.

S Corporation

A corporation that complies with the sub-chapter S of the Internal Revenue Code is to be classified as an S corporation. Capped at a 100 shareholders limit in most states, S corporation provides the shareholders with limited liability responsibility like a C corporation while also protecting them from double taxation.

Professional Corporation

A professional corporation is a business organization created by a group of individuals from the same or different fields who cannot form a corporate organization. The professional organization must provide a professional service and the professionals in the corporation must be licensed to practice their profession.

Non-profit Corporation

As the name suggests, a non-profit corporation is a business organization that undertakes commercial activities without the intent of generating a profit. It provides its shareholders with the same limited liability as traditional organizations. Contrary to popular belief, non-profit corporations are not bound by law to generate any profit. They can generate profits from their business transactions but the profit must then be used to further the non-business goals of the organization.


So, these were the different business structure types which exist. Now you can see and decide which floats your boat the best and then get it registered. Do let us know if you have any suggestion or any question in the comment section down below.


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