Types of Business Profit: Partnerships, Corporations, and Sole Proprietorships | ENTRE Institute Reviews

 

What is a business? Well, a business is simply defined as an enterprising entity or business engaged in professional, commercial, or industrial activities. A business can be also called the structured efforts of people to make and sell products and services to earn revenue. In fact, a business can be defined as any undertaking undertaken to make money. In the United States, a business can include any partnership or corporation with one or more employees, any trade or business involving physical presence or any agreement entered into by the participants to undertake to perform the activities of the business.

There are several ways on how to make money out of a business. Every business firm has its own way on earning profit and it depends on the nature of business firm to define it. Some firms are into manufacturing goods while others are into services and others are into finance and many other verticals. Manufacturing is one of the most lucrative businesses that you can enter into because there are several modern-day multinational companies that are primarily focused on manufacturing.

On the other hand, some firms are into sole proprietorship. A sole proprietorship is a kind of business where the sole owner or proprietor of the business owns everything that the business possesses. He is then taxed as an individual and not as a company or business. A sole proprietorship is taxed at a minimal rate of 15%. However, when you incorporate a business in the United States, you become a member of a corporation and your earnings are subject to corporate taxation.

Examples of sole proprietorship include partnerships. Partnerships are types of businesses where at least one partner is a sole proprietor. Examples of partnerships include limited liability partnerships, general partnerships and limited liability companies. Examples of corporations include corporations, limited liability companies, partnerships and sole proprietorships. The main difference between these examples is that corporations are highly profitable while sole proprietorships are usually unprofitable.

The shareholders of a partnership or corporation of shares of stock or ownership in the business. Each shareholder is given a right or power to vote for the election of officers and also to buy or sell the company's shares. There are different types of meetings and officers' meetings held by partners and corporations. Partnerships have their meetings at regular intervals and are generally called meetings of the general partnership. Meetings of the general partnership are called biennial meetings and shareholders must attend them in order to make any changes to the business plan.

On the other hand, sole proprietorships are formed in a unique way. The only people involved are the owner or proprietor of the business. One main reason for the unique nature of sole proprietorships is that there is no need for shareholders' meetings or general meetings. The only people that are involved in these businesses are the owners and that is it.

The problems with sole proprietorships and partnerships are numerous. One of the main problems is that they are highly complex to set up. They are also difficult to liquidate when necessary. Another problem is that they limit the liability of the business. There are many businesses that have gone bankrupt due to the inability to pay the debts of the business.

The good news is that there are businesses that are able to use these three main types of business structures. A partnership, corporation, and sole proprietorship all profit from the same source - the selling of goods or services to customers. The profit each of these makes is dependent on how well the products sell. Each type of business has different ways of keeping their profits. However, all three types profit from the sale of products or services that individuals need.