A Quick Lesson in Ways Businesses Are Organized

02 September 2010

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This is the VOA Special English Economics Report.

Businesses are structured in different ways to meet different needs.

The simplest form of business is called an individual or sole proprietorship. The proprietor owns all of the property of the business and is responsible for everything.

For legal purposes, with this kind of business, the owner and the company are the same. This means the proprietor gets to keep all of the profits of the business, but must also pay any debts.

Another kind of business is the partnership. Two or more people go into business together. An agreement is usually needed to decide how much of the partnership each person controls.

One kind of partnership is called a limited liability partnership. These have full partners and limited partners. Limited partners may not share as much in the profits, but they also have less responsibility for the business.

Doctors, lawyers and accountants often form partnerships to share their risks and profits. A husband and wife can form a business partnership together.

Partnerships exist only for as long as the owners remain alive. The same is true of individual proprietorships.

But corporations are designed to have an unlimited lifetime. A corporation is the most complex kind of business organization.