A registered firm can also be transferred easily to a corporate entity, should the need arise for the same. Certain types of companies also protect the personal interest/assets of Partners/Directors in case of losses or debts. Following are the common types of business structures prevalent in India and their notable features to help decide the best legal structure for your proposed entity. The four main forms of business ownership are Proprietorship, Partnership , Co-operatives ,Corporation and franchise.

1. Anil Kumar ,
Lecturer (Textile Design)
Pandit Lakhmichand State University of
Performing & Visual Arts , Rohtak
E-mail-anilvns143@gmail.com
Mobile no. +919729138649
Types
of
Business Ownership

2. Types of business
The four main forms of business ownership are listed below.
• Proprietorship
• Partnership
• Co-operatives
• Corporation
Entrepreneurship Development
 A franchise is a combination, or
hybrid, of the four forms of ownership.

3. Sole Proprietorships
Entrepreneurship Development
•It is a business owned by one person who is known as the proprietor.
•The proprietor has a wide range of responsibilities including arranging
displays and selling to customers.
•Funds to run the business usually come from the owner’s savings,
friends, family, or from a bank loan.
•If the business prospers, the owner receives all of the profits. If the
business does poorly, the owner is responsible for its losses.
• This is called unlimited liability.
•Unlimited liability: The responsibility for all of the business’s debts and
liabilities could mean that the owner loses his/her home or other personal
assets.
• Unlimited liability is the greatest disadvantage of a sole proprietorship.
•This form of business ownership is easier and less expensive than the
other forms of business ownership.
•Business income is declared on the owner’s personal income tax rather
than filing a separate business tax form.

4. Partnerships
Entrepreneurship Development
•It refers to a type of business in which two or more individuals share
the costs and responsibilities of owning and operating it.
•The terms of the partnership are recorded in the partnership
agreement.
•The most common form of partnership is a general partnership.
•When two individuals form a limited partnership, the partners are only
responsible for the funds they both invested in the initial business.
•This is called limited liability.
•Examples :- Baskin-Robbins, Black & Decker, and Proctor & Gamble.
•A general partnership means that all partners have unlimited liability
for the firm’s debts. With this form of unlimited liability each partner
could be held responsible for the other partner(s)’ business-related
arrears.
•With a limited partnership there is limited liability, this means that each
partner is only responsible for paying back the amount they invested in
the partnership. If the business fails, their personal savings and other
assets cannot be used to pay the partnership’s debts.
•The working relationship between partners can be an advantage of a
partnership.

5. Corporations
Entrepreneurship Development
A corporation is a business granted legal status with rights, privileges,
and liabilities that are distinct from those of the people who work for the
business. Corporations can be small such as a one-person business or
large such as A multinational that conducts business in several
different countries.
Small portions of corporate ownership that are owned publicly are called
stocks or shares.
Individuals who own shares of a corporation are called shareholders
and become owners of the business.
Shareholders have limited liability. A board of directors runs a
corporation that is owned by shareholders.
A publicly traded corporation that makes a profit may pay out dividends
to shareholders.

6. Contd…..
Entrepreneurship Development
•Multinational corporations are also know as transnational.
•Most corporations are owned entirely by individuals, families, and small
groups.
•Large corporations require funds, therefore the original owners divide the
corporation’s ownership into small parts called shares or stocks and sell
them through a stock exchange.
•Examples of stock exchanges are the TSX, the Toronto Stock Exchange, and
the New York Stock Exchange.
•Once shares are sold the corporation becomes a publicly traded (or publicly
owned) corporation.
•The more shares that a shareholder has the more control he or she has.
One share usually equals one vote.
•With so many owners, a board of directors is designated to run the
corporation beyond the amount originally invested.
•Shareholders have limited liability, they cannot be held legally responsible
for the debts of the corporation.
•If the corporation loses money, investors only lose the amount invested, if the
business makes a profit it can be reinvested and/or paid out to shareholders in
the form of dividends.

7. Types of corporation
Entrepreneurship Development
Private corporations:
•Only a few people control all the shares or stock, therefore the business.
•Shares are not listed for sale on a stock exchange.
Public corporations:
•Available to anyone, shares in these corporations are bought and sold on
the stock exchange.
•Selling shares raises money for the corporation.
•Shareholders are the owners of the business.
•The more shares an individual owns, the more impact they have on the
business. One share means one vote.
Crown corporations:
•A business owned by the provincial or federal government.
•Examples include the Business Development Bank of Canada, Canada
Post, and the Canadian Broadcasting Corporation (CBC).
Municipal corporations:
•In an effort to provide local citizens with services towns and cities can be
incorporated.

8. Co-operative
Entrepreneurship Development
•A co-operative is owned by the workers or members who buy the
products or use the services that the business offers.
•This type of business is motivated by service and not profit. Adaptations
of this business model include consumer, retail, and worker co-
operatives.
•The motivation is not profit.
•Members make up the board of directors that run the co-operative.
•Regardless of the number of shares owned, each member has only one
vote.
•Profits of a co-operative are distributed according to how much each
member spends.
•A local credit union is an example of consumer co-operative.
•IGA (Independent Grocers Alliance) is an example of a retail co-
operative.
•A worker co-operative is created to provide work for its members.
•Some co-operatives are not-for-profit such as health care, child-care,
and housing.

9. Franchises
Entrepreneurship Development
The franchiser licenses the rights to its name, operating procedure,
designs, and business expertise to another business called the
franchisee.
A franchise agreement can provide the franchisee with
• a ready made, fully operational business
• brand recognition that is appealing to consumers
Requirements before a franchise is awarded may include
• paying the franchise fee
• agreeing to pay a monthly percentage fee as well as any national or
local advertising costs
• purchasing all supplies centrally from the franchiser
• participating in franchiser standards training
•Examples of franchise operations include; hotels, motels, fast-food
restaurants, and automobile dealerships Paid to the franchiser, the
franchise fee can range from thousands to millions of dollars.
•A monthly franchise fee might be 5% of total monthly sales.
•Local and/or national advertising costs are roughly 1% of monthly sales.