Starting a small business has sounded familiar to many business-minded people. The idea is no longer new to the ears of many but also the question that many successful business people today have started small – small businesses or companies. If you are one of those striving to start a small business – read the full info here to guide you on this new venture.
What is a small business?
A small business is a small corporation, sole proprietorship, or partnership with fewer employees or less yearly revenue than a regular-sized business or corporation. It is privately owned, defined as “small” and differs by country to the industry in terms of application for government support and to entitle for preferential tax policy. The United States Business Administration defines small businesses according to a set of standards based on every specific industry.
Different types of small business
Small businesses can provide the community with products and services, targeting specified demands or needs. A small business has structures influencing the capabilities of:
- Business operations
Understanding the small business types helps you create the right structure for your needs. The structure is essential in dictating the company’s operations limitations. The business structures have functions:
- Outline the number of people who can own the business
- Who is liable
- What taxes apply
It is necessary to determine the business purpose to comply with the state-specific filing requirements before registering and establishing a small business. Here is a list of the different types of small businesses to help you develop a small business structure:
- Sole proprietorship. A small business owned by a single individual is liable for all business aspects:
- General partnership. A small business owned by two or more individuals is liable for the legal and financial aspects of its business operations.
- Limited Partnership. A small business type is similar to general partnerships with two or more business owners. They divide the legal and financial responsibilities between limited and general partners in an agreement.
- Limited Liability Company. It allows a business to have no risk on their personal property, and one or more small business owners are not personally liable for the business transaction.
- Non-Profit. A small business generates revenue, funding the company’s development and other operational costs.
- C Corporation. It is a small business with one or more owners not personally liable for the business.
- S Corporation. A small business with ownership limitation, which has 1-100 owners, is not personally liable for the small business.
After understanding these seven different types of small businesses, you can decide which type of small business to land as your new venture.