written by | April 22, 2022

Choosing the Right Type of Business

There are various types of businesses. When we look at the different business categories, all the workings of the respective business are very different. Before starting a business, we must look at what types of business we will set up and continue. Choosing the type of business is one of the practical steps to success. Below you will see a list of different business types you can start. 

Did you know?

For starting a business, we have to look at whether we are capable of bearing the risk or not. If you do not have the sufficiency of taking a set amount of risk, there is no motive for starting a business.

What Are the Different Forms of Business Organisations?

Also Read: Successful Small Business Ideas for Indian Entrepreneurs

Most Common Types of Businesses

When we look into it, there are different types of business. To achieve a business's critical perspective, you have to look at what type of business you want and what you want in your industry. Here we will see many types of businesses that will give you a choice. The types of business are as follows:

1. Sole Proprietorship

  • The sole proprietorship is a business that involves the setup of an individual only. 
  • The sole business is known as the simplest form of the business entity.
  •  It is effortless to set up the sole business as it involves only the mind of a single person. 
  • He is the only one who will take all the decisions in the organisation. He is the only leader in his business with the capacity for risk-bearing. 
  • There is only one person in the sole proprietorship, so there are more chances of risk. 
  • He is the only one who will invest all the capital in the business for its initiation. 
  • The government rules and regulations in the sole proprietorship are very few compared to an organisation's setup. 
  • The owner of the sole proprietorship has to pay the tax only a single time. 

 2. Partnership

  • The term partnership refers to a term that involves two persons or more than two persons. 
  • There is a mutual agreement between the persons who decide to do the business with the available investment amount. 
  • The partners are the only ones who will do the business concerning the company's capital, risk and other functions. 
  • The partners make their decision with mutual understanding and implement them in their respective organisations.
  • The liability of the partners is unlimited.
  • The partners decide to do the business as per their profit motive. And this is the term that they choose at the beginning in which they will invest the capital and distribute the profit and risks. 
  • We can divide partnerships into categories such as limited liability, limited partnership, general partnership, partnership at will, etc. 
  • The main benefits of partnership are that it is elementary to set up the business as all the capital invested will be distributed. 
  • One more benefit is that each person has a different mindset, and they will make excellent decisions for meeting their goals.

 3. Limited Liability Company (LLC)

  • A limited liability company is a form of business organisation that involves one or two people as owners. 
  • The members of the Limited Liability Company have equal rights to participate in the business management till the time they elect the business manager. 
  • The Limited Liability Company members are protected from the personal liability of the business debts.
  • The LLC members use the amount of paying the debts from their invested amount. It will not be their liability.

 4. Corporation - C Corp

  • The C corporations are business organisations that involve many investors.
  • When the investor number reaches the limit and exceeds the 100 shareholder limit, it becomes a C corporation.
  • C Corp is like a public company.

5. Corporation - S Corp

  • In the S corporation, the setup of the company is effortless. 
  • The business setting up is considered a profitable business setup.
  • It is a type of small business.
  • The S corporations are tiny in size, or one can say that they consist of the midterms.
  • The tax of the persons will get liable from the persons himself.

 6. Corporation - B Corp

  • The B corporation is a type of third-party corporation that helps in evaluating the company stakeholders. 
  • The companies who want to choose this type of business have to go through a certification process that will impact the B assessment.

7. Corporation - Non-Profit

  • Non-profit organisations are the ones that help in serving the public for good reasons.
  • Religious, educational and charitable trusts are all non-profits. 
  • It is a type of organisation free from all tax liabilities.
  • Any amount they will earn will become tax-free.

Also Read: What is a Business Model?

How to Choose Which Type of Business to Start?

When you are thinking of forms of business or an organisation, you have to consider all the factors that will be the best for you. It will be easy if you are thinking of setting up a sole proprietorship, but starting up this business is challenging. Because in it, you are the only single person who will invest the capital, and the risk capacity will be only yours. Here we are providing you with some of the methods that will help you know about the terms you have to look at while initiating a business. The terms of trade are as follows:

1. Flexibility

Before starting up a business, you have to look at the things that determine whether it will be easy to set up the business. It must include all the legal obligations or duties you have to look at. Choose the business that involves minor legal formalities or other risks.

2. Liability

There are different types of business which you can select like the sole proprietorship, partnership, limited liability and many others. At the company's start, you have to look at what types of business you want, whether a minimum liability business or other business. Some businesses are there that involve limited liability.

 3. Taxes

Tax is the term that affects the business for a long time. You must opt for the type of business with minimum tax liability. Consider the industry in which you have to pay significantly less tax. The tax is calculated according to the slabs decided as per the terms. And overall, it depends on the profit earning factor that determines how much your business is making.

4. Control

The business will also get affected by the control type of business. It involves the person who will control the organisation, whether a single person or a group. In the sole partnership, the whole set of decisions is a single person, whereas there must be a mutual understanding in other types. 


From here, we see that a person can choose different types of businesses. But at the time of starting a business, he must look at all factors like risk-sharing, capital investment and other risks. Above, you have seen the list of business types that will help you choose the one. After establishing a business, it is a must that it can get started and will earn good revenue. To make the organisation better, we have to look at the purpose of designing it.

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Q: What is capital investment in a sole proprietorship business?


Look at the risk you have while setting up a business. In a sole proprietorship, you have to invest only from yourself as there is no investment sharing with other persons. Whereas in different types of business, the initial amount will get distributed among the number of persons.

Q: What do you understand about a complex type of business?


Complexity: Consider the type of business that will be complex for you to start up. The business's complexity helps you look at what kind of things are more straightforward. You have to see the risk capability of sharing, capital investment scheme and other related terms.

Q: Did you know that LLC is a type of business with many benefits?


If you are thinking of starting up a business LLC, it will be very beneficial. As in the LLC business, the partners cannot pay from their pocket, which will be from the amount they have invested in the business. One can also set up the entity of the LLC with some simple steps as there is nothing that one has to do in detail. And in the LLC, there is no prescribed number of owners, and any member will become a member of the company.

Q: Did you know that partnership business has different types?


Yes, you can divide partnership business into many different terms. All different sets of words are the complete set of different meanings. The one partnership business is a general partnership in which two or more people do the business with equal rights. All the partners are responsible for their rights present in the industry. Another one is a limited partnership, limited liability partnership, etc.

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