Types of businesses and funding sources

Business law

P4 Types of businesses
A business is legal entity which provides various products and services to people. they have to follow
several rules and regulations. there are different types of business which exist within a nation. the
structure and size of business depends on its type. basically, they are described as below :
Sole proprietorship- It is a type of business in which business is owned by single owner. the person is
responsible for managing of entire business and taking decision. the profit earned is received by owner.
It is easy to set up legally this business. there is unlimited liability in it. Also, it is easy and less costly
to set up business.
Partnership – In this there are two or more than two persons involved in business. there is agreement
done between them on basis of partnership act. Alongside, in agreement it is written how decision are
made, profit is shared, etc. in addition, profit is shared on basis of agreement or investment made into
business. in this the liability of partner is limited.

CONT..
Private company – It is a business started by group of people for common objective. it is having
legal existence from others. The company is registered by share of stocks. in this liability of
stakeholder is limited. Moreover, stakeholder elect BOD who form goals and objectives. Private
company does not dissolve when ownership changes.
Limited liability company – this type of business is having feature of both partnership and company.
they are not incorporated as owner is having limited liability. It can be either a sole proprietorship,
partnership etc.
NGO- In this a business is set up for social cause. there is no aim of earning profit in it. moreover,
NGO are formed by private companies or an individual. the laws and regulations applied in it are
different from normal business. besides, they are run via funds obtained from various sources.