A business is defined by Wikipedia as an unincorporated body corporate or organisation functioning for the benefit of its members or associates. Businesses may be privately owned and operated or collectively run for profit through a publicly traded company. Large businesses are run by corporate management teams, while medium size and small scale companies are usually run by boards of directors with general supervision by shareholders.
Business enterprises may be sole proprietorships, partnerships, corporations, limited liability companies, LLCs (for corporations), partnerships, joint-venture partners, and boards of directors. There are many types of businesses ranging from small locally-owned industries to the largest international companies in industries ranging from textiles to banking. Businesses may also include private equity, venture capitalists, financial sponsors, outsourcing, intellectual property, retailing, and wholesale or retail franchises. All these different types of businesses operate in different ways, but all share common goals which are to make profits and build market share through the accumulation of assets, expanding customer base and production, and innovation and restructuring operations. Each of these aspects of business development requires financing, although different methods and sources of financing may apply to different types of business models.
In a sole proprietorship, the person running the business controls all aspects of the business. The business consists of the owner, partners, or other direct employees. Partners in a partnership enjoy the same advantages as owners of a sole proprietorship, although their participation is much more limited. For instance, in a sole proprietorship all profit is split between the partners. In a partnership, one or more partners directly profit from the business.
Limited liability companies (LLCs) are another example of a business structure, which is considered a partnership. Like sole proprietorships, the partners are the ones profiting from the partnership. However, unlike the partner, the shareholders of an LLP are not entitled to receive dividends. The main article relating to these businesses is that they are often used by owners to shield themselves from personal lawsuits. This protects them from creditors or tax collectors attempting to recover unpaid debts. For this reason, they are also often used as a way for wealthy individuals to retain control over their wealth in the event that they become incapacitated or unable to manage it on their own.
A limited liability company is a hybrid between a corporation and sole proprietorship. It is essentially a corporation with one or more owners rather than one owner. For instance, a limited liability company could be formed with one investor, whereas a corporation can exist with as many owners as there are shareholders.
Private corporate formations, also called LLCs, are formed for a variety of purposes. For instance, they can be formed to circumvent the requirements of filing various forms with the state. This means they do not have to report the ownership changes to the state. They can also use a separate legal structure so that any debts of the corporation are treated as private rather than business debts. Other uses include creating an independent board of directors and setting up an entity called a ‘pass-through’ account.