Types of Business Ownership

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Sole proprietorship

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A business owned by one person who receives all the profits from the business and takes all the risks.

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Partnership

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A form of business ownership in which the business is owned by two or more persons.

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General partnership

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A type of partnership agreement in which all partners are liable for a business’s losses; also known as an ordinary partnership.

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Limited partnership

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A type of partnership agreement in which a partner has limited liability; the liability is limited to the amount of the investment.

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Limited liability partnership (LLP)

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A form of business ownership that is generally used by business professionals for the purpose of protecting innocent partners from the malpractice of the other partners.

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Limited liability company (LLC)

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A form of business ownership in which members of a corporation experience limited liability; there is limited taxation on company income and limited life for the business entity.

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Hybrid structure

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A form of business ownership that combines elements of corporations and either sole proprietorships or partnerships.

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Corporation

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A form of business ownership that is owned by stockholders who have purchased units or shares of the company; an “artificial being, invisible, intangible, and existing only in contemplation of the law” (U.S. Supreme Court).

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Private corporation

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A type of corporation owned by a few people that does not offer its shares for sale to the general public; also known as a closely held, or close, corporation.

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Public corporation

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A type of corporation that usually sells millions of shares of stock to many stockholders; must make its financial information available to the general public.