Types of Businesses

Business is the combined effort of individuals to fulfill social needs and earn a profit. It involves economic inputs to supply goods or services in exchange for cash or kind, forming a business entity. There are various types of businesses:

1. Service Business

• Provides intangible products (no physical form).
• Offers expertise, professional skills, etc.
• Examples: accounting firms, banks, law firms, schools, repair shops, salons.

2. Manufacturing Business

• Purchases products to use as materials for production.
• Transforms purchased items into new products.
• Involves labor, raw materials, and factory overhead.
• Sells produced goods to consumers.

3. Merchandising Business

• Purchases products at wholesale and sells at retail prices.
• Known as "buy and sell" businesses.
• Products are sold without changing their form.
• Examples: convenience stores, grocery stores, resellers, distributors.

4. Sole Proprietorship Business

• Owned, formed, and operated by a single person.
• Easiest and least costly to form.
• Owner uses personal assets, enjoys profit, and pays fewer taxes.
• Unlimited liability and difficulty in raising capital.
• Business ends with the owner's death or resignation.

5. Partnership Business

• Owned and operated by two or more partners.
• Easy formation if agreements are adhered to.
• Capital raised from partners.
• General partners have unlimited liability; limited partners do not.
• Disagreements can occur; business life is limited.

6. Corporation

• Separate legal identity from owners.
• Owned by shareholders, easy capital raising.
• Limited liability for owners, operations controlled by a board of directors.
• Unlimited business life, but involves double taxation.

7. Multinational Corporations (MNCs)

• Operate globally, producing and selling in various countries.
• Centrally controlled operations, foreign investments.
• Examples: Honda, Coca-Cola, Toshiba, Nike.

8. Franchises

• Businesses bought with a profit-sharing condition with the parent company.
• Rapid business growth, no debt incurred.
• Examples: Pizza Hut, KFC, Domino's.

9. Limited Liability Company (LLC)

• Formed by at least one person through an agreement.
• Includes management issues, profit distribution, and interest assignment.
• Owners have limited liability; can be taxed in various ways.

10. Cooperative

• Owned by a group for mutual benefit.
• Members share interests, can be incorporated or unincorporated.
• Examples: housing cooperatives, credit unions, utility cooperatives.