Forms of Business Ownership
A company organization is frequently referred to as an accounting entity or a
commercial entity by accountants. Any commercial organization that operates as an
economic unit, such as a hardware store or a grocery store, is referred to as a business
entity. There are three different types of businesses:
A. Single Proprietorship - a business that is owned by only one person and is
frequently operated by that person. Physicians, lawyers, electricians, and other self-
employed individuals are examples of single proprietors. Single proprietorships make up
a large percentage of small service and retail firms. Organization of such enterprises
does not require any legal procedures, and activities can normally begin with a small
investment.
B. Partnership - a firm controlled by a group of two or more people who agree to
contribute money, property, or industry to a common fund with the purpose of splitting
the profits.
A company's owners and managers are typically the same persons. Small businesses
and professional practices such as dentists, lawyers, and accountants frequently form
partnerships.
C. Corporations- is a legal entity that are formed and created by operation of law, with
succession rights and powers and attributes expressly granted by law or incident to their
existence. A corporation is distinct in that it is a man-made entity that is held by a small
number of owners or shareholders. Stockholders or shareholders purchase shares of
stock in the corporation, which are units of ownership. The owners would only lose the
amount they paid for their stock if the company failed. The corporate form of business
protects the owners' personal assets from the corporation's creditors.
A company organization is frequently referred to as an accounting entity or a
commercial entity by accountants. Any commercial organization that operates as an
economic unit, such as a hardware store or a grocery store, is referred to as a business
entity. There are three different types of businesses:
A. Single Proprietorship - a business that is owned by only one person and is
frequently operated by that person. Physicians, lawyers, electricians, and other self-
employed individuals are examples of single proprietors. Single proprietorships make up
a large percentage of small service and retail firms. Organization of such enterprises
does not require any legal procedures, and activities can normally begin with a small
investment.
B. Partnership - a firm controlled by a group of two or more people who agree to
contribute money, property, or industry to a common fund with the purpose of splitting
the profits.
A company's owners and managers are typically the same persons. Small businesses
and professional practices such as dentists, lawyers, and accountants frequently form
partnerships.
C. Corporations- is a legal entity that are formed and created by operation of law, with
succession rights and powers and attributes expressly granted by law or incident to their
existence. A corporation is distinct in that it is a man-made entity that is held by a small
number of owners or shareholders. Stockholders or shareholders purchase shares of
stock in the corporation, which are units of ownership. The owners would only lose the
amount they paid for their stock if the company failed. The corporate form of business
protects the owners' personal assets from the corporation's creditors.
