Different Types of Business Enterprises and Long Term Sources of Finance

ACCOUNTING FOR
BUSINESS

INTRODUCTION
Business refers to an enterprise that have come into existence to sell goods and services for the
main purpose of profit earning (Abdennadher and et.al., 2021). There are different types of
business enterprises. These enterprises involve in providing the customers with goods and
services with the main goal of earning profits. This report covers the three main types of business
enterprises which can be used by the entrepreneurs to start a business. The report also highlights
how these business enterprises can be financed and can work efficiently with the funds provided.
Why the Different types of business enterprises exist? Explain using examples.
Business refers to an individual entity which ids formed with the help of different regulations but
the main aim of these entities is to serve its customers with the main purpose of earning profits.
These are done on commercial basis to the customers. Most of the organization survive to gain a
return and these are registered as the profit for the business owners. Profit is the reward for risk
taken, which means that profit is in reality a kind of payment that is earned by the business
owner in taking the risk to spend in the business and carrying off its everyday actions. Here
comes a distinction in the functions of different business (Badu and Appiah, 2018). These
business are different in the working, needs and wants. If an owner wants to start a small scale
business with low capital, they might want to go for sole proprietorship. If the entrepreneur
wants to go for a middle scale business with medium level of capital investment, they might
want to go in partnership with different individuals with similar interests. If an owner wants to
go for a long term investment with larger share capital they will invest in big corporations. There
are three types of business enterprises and these will be discussed further:
Sole Proprietorship is a type of business enterprise which is owned by one person only. This is
the simplest kind of business enterprise as it is owned and governed by a single individual known
as sole proprietor. Sole proprietor comes into existence as the owner wants to invest small capital
and manage a small scale of business. All the decision-making knowledge regarding the business
lies in the hand of this single person called sole proprietor. The owner has unlimited liability.
Example of sole proprietorship is, beauty parlour, mobile repair shop etc. In a sole proprietorship
business, liability of the firm can be unlimited and proprietor suffer every loss of the business