Business is a process in which a person or an organization purchases and or sells goods in an attempt to make a profit. For example, a person collecting and selling newspapers is said to be involved in a business.
Types of business:
The most common types of business are
Sole proprietorship is a type of business owned by a single person who is called a sole proprietor. The sole proprietor receives all the profits and also assumes all the risks and debts involved in the business.
Partnership is a type of business owned by two or more persons. The persons involved are called partners. The partners participating in the business makes a financial contribution, work contribution or both.
The partnership business is further classified into :
General partnership is a type of business where all the partners are involved in the control and management of the business. All the partners are liable to the loss and debts in the business.
Limited partnership is a type of business where there are two types of partners: general partners and limited partners. The general partners are responsible for the control and management of the business and are liable to the loss and debts. Whereas the limited partners are just investors and have limited liability.
Limited Liability partnership is the type of business where the partners are not personally liable for loss or debts of the other partners but are responsible for the loss and debts occurred due to their negligence.
Corporation is a type of business where the persons have limited liability that is they are not personally liable for the losses and debts in a business as the corporation can raise capital by selling the shares. The persons involved in this type of business are called ‘shareholders’.
Limited Liability Company is a combination of partnership and corporations. Like corporation the persons involved in this type of business are not liable for the loss or debts in a business. This type of business is easy to set up similar to partnership business.
Franchises are a type of business where a company obtains a license from an established business. This license helps the company to run their business by using the business methods and trademarks of the established company. Examples for this type of business are fast food chains, restaurants, etc...
Business Insurance :
Once a business has been established, it is necessary to protect the business from risks. This can be achieved with business insurance.
The two main types of insurance for a business are :
Property insurance: This type of insurance offers protection to the buildings and machineries installed within the building. An insurance agent may explain the extent of coverage in case of damage.
Liability insurance: This type of insurance offers protection to the company when it is legally liable to a third person or an organization. For example, when your company loses a lawsuit.
Business Law :
Business Law is a law that applies to all types of the business stated above. Hence, it is necessary to abide these laws when establishing a business.