BUS201|Introduction to Business in a Technology World
There are four main types of businesses in society today. In this paper, I will discuss these four, one at a time, and its’ advantages and disadvantages. There is much to know and learn about each different type of business. I will begin with the simplest and work my way to the most complex.
Let’s begin with Sole Proprietorship. This is when a business is owned by one person. It can be a small business or a large business but only one owner is involved. In order to start this type of business, one can go to a bank and ask for a small business loan or hope that a family member or friend can lend them the money. This person would manage his or her own business and not need any documents. If the business is unsuccessful, it is very easy to disseminate. There are fantastic tax benefits but he or she would be liable for any and all business financial obligations. A good example of this type of business would be a hot dog vendor in downtown Philadelphia selling from a lunch truck.
The next business is a Partnership. This would consist of two or more people going into business together. Unfortunately, there is unlimited liability. All partners share management duties and it’s not a taxable entity. Each partner pays his/her share of income tax and can subtract losses against other sources of financial gain. There must also be an agreement in place between the partners. An example of a good partnership would be two friends who open a dollar store.
The next type of business is a Limited Liability Corporation or an LLC. These are owned and operated by one or more persons. They need articles of organization as well as operating agreements. Dissolving the company can be demanding depending on the terms of the agreement. LLC’s limit the liability of the owners and so, are easier and more cost effective to operate. Over half of the new businesses registering today are LLC’s such as DirecTV, Giant Foods, LLC, and Chrysler.
The final business is a Corporation which is owned by stockholders. These companies are way more complicated than the others. There are bylaws and articles of incorporation that must be put in place as well as a separate management team. These can also be very expensive and arduous to alter or dismantle. I have worked for a couple of these ESOP (employee stock option plan) companies, as has my husband. When you own a piece of the company through your stock, you feel as if you are given a bit more credit as an individual thinker rather than a cog on the front line. You must work long and hard to get there but the benefits can be worth it. Such companies we worked for are the now-defunct Texaco, short for Texas Oil Company, and the East Coast gas station/convenience store, Wawa.