Lesson 2: Type of Business
The three types of business structure, the advantages and disadvantages of each and how to decide which one you should choose. How to set up the business once you've chosen the type of stucture.
Introduction
When any kind of activity is carried out, a society has an interest in knowing who is responsible. This is especially true of commercial activities - someone is doing it and someone is responsible for any consequences. To keep track of these responsibilities, jurisdictions in the capitalist system allow three kinds of non-government entities to carry out business activities:
- Individuals, also called natural persons;
- Companies, also called legal persons; and
- Partnerships, which are groups of persons.
We're going to look at the background of each business structure, what the advantages and disadvantages are and how to make a decision on which structure is best for your small business to start with. Later, once the business is established, you may and probably will want to change and we'll look at why and how to do it.
This particular lesson is not meant to constitute legal advice. It is just general background information which is intended to help you decide which type of business structure is best for the small business you intend to start. If you have any detailed questions about the rights and responsibilities of a particular type of business in your jurisdiction or what is required to satisfy local laws and regulations, you should consult a local legal professional.
