Business & Money

The Major forms of Business Organisations ( Easy Guide)

Last updated on May 10th, 2023 at 12:41 pm

There are many forms of businesses. However, some are better than others when it comes to the type of growth they can generate. These types of businesses are also referred to as ‘organizations. Every organization has a type or form. From sole proprietorships, partnerships, corporations, to unincorporated businesses and everything in between, we’ll break down all the different forms and what they mean.

An organization is an entity that is formed with a view of running its affairs. It can be a company, association, educational institution, government, etc. This is why we can say that an organization has a purpose. The purpose of the organization is to accomplish certain goals or objectives. The type of an organization is determined by the purpose.

Major forms of Business Organisations

There are basically three types of organizations; they are private, public and non-profit organizations. Each type of organizations has different objectives. Private organizations have an intention of maximizing profit and have a legal responsibility for making profits.

In case of public organizations, profit is not their main objective but the purpose of the organization is to serve the public. Non-profit organizations are organizations which are made up of people who are motivated by social causes and charitable purposes. It is their primary purpose to provide assistance to those who are in need.

The Major forms of Business Organisations and their advantages and disadvantages.

The world of business is filled with thousands of different types of businesses, each of which has its own benefits and pitfalls. Whether you’re running a retail store, selling products online, or working with clients remotely, every business faces similar challenges. You’re going to face marketing challenges, competition, customer service issues, financial struggles, and so much more.

It can be difficult to know where to start when it comes to making the transition from employee to entrepreneur. But the good news is that you’re not alone. We’ve compiled a list of the top business organization types and the pros and cons of each. Read on to learn what to look for in Major forms of Business Organisations that will best suit your needs.

Sole Proprietorship

This is where you are the sole owner of your business. You are the only one who has ownership over the business. You are also the only one who can make any decisions regarding the company. It’s very simple, you have to be responsible for everything that happens in your business. You cannot outsource your duties to anyone else and you must handle all aspects of the business.

Avantages Of A Sole Proprietorship

With sole proprietorship, you own and operate the business entirely yourself. It’s a simple and affordable form of self-employment that lets you do the work that makes your business profitable without taking on the overhead costs of running a business. But what are the benefits of being a sole proprietor? Here are the key advantages of Major forms of Business Organisations:

1.No need for a loan : As a sole proprietor, you can start your business with just $500 to $5,that’s not only much less than the average start-up cost of $100,000 or more, but it’s also far less than the bank will require you to borrow to buy inventory, rent office space, pay for advertising or even hire employees. Plus, if you’re a good operator, you can build a business that will eventually generate enough income to make paying off the loan a lot easier.

Major forms of Business Organisations

2. No need for a business plan : The good news is that there’s no need to create a business plan for a sole proprietorship. This is because you’re not planning to go public and raise capital by selling stock. The bad news is that you won’t have a business plan in case you ever do decide to sell the business. So you’ll want to be sure to document your business operations, including things like your marketing plan, your sales and marketing strategies, your pricing and your accounting system.

3. Better control over your schedule : Being a sole proprietor lets you set your own hours, which means you’re more likely to spend time on activities that are important to you, like spending time with your family or running a marathon. But you also have more freedom to work when you want to, as long as it’s within your operating hours.

4. No limits on growth : A sole proprietorship allows you to grow at any time without having to worry about raising capital or going public. However, if you decide to get a business loan or open up a business in a partnership, you’ll be limited by the terms of the loan and by the agreement with the other partners.

5. No need to pay taxes : As a sole proprietor, you won’t be required to pay income taxes, so you’ll save money over the long term. And you won’t have to file tax returns each year, so you’ll save time.

Disadvantages Of A Sole Proprietorship

If you run a sole proprietorship or if you are thinking of starting one, there are many drawbacks. The biggest is that there is no insurance. If you are sued, you will be personally responsible for any loss. If your business is sued, you will have to defend yourself and pay legal fees. You will also not be able to pass your business on to your heirs. Another reason why sole proprietorships aren’t ideal for a business owner is that it requires a lot of effort and time spent on the business’s financial records.

As the owner, you have to know and understand the intricacies of the business’s finances. All the numbers need to be balanced, all the money spent needs to be tracked, and all the profits need to be reported and reconciled. Even if you hire a bookkeeper to help you with these tasks, they still require a lot of effort. Here is a comprehensive list of the disadvantages of a sole propreitorship:

  •  Sole Proprietorships Are Expensive
  • Sole Proprietorships Have Limited Liability
  • Sole Proprietorships May Not Be Easy to Sell Your Home to
  • Sole Proprietorships Have No Workers Compensation
  • Sole Proprietorships Cannot Form Corporations
  • Sole Proprietorships Cannot Sue or Be Sued


Partnership is a term that means to work together as equals, to share responsibility, to make decisions together, to agree on priorities and resources, and to collaborate. As entrepreneurs, we need to have partners who are trustworthy, honest, reliable, and able to deliver. We must trust our partners and ourselves to deliver value.We must be able to trust each other and our own abilities and know that we can deliver results.

Major forms of Business Organisations

Trust is the basis for every relationship. Without trust, relationships cannot succeed. If you want to build trust with your business partner, you need to be open and honest, and be prepared to make mistakes. You need to be transparent and to communicate clearly and honestly. You must be willing to take responsibility for yourself and your partner’s success or failure. When you build a partnership, you have to establish your expectations and goals in advance.The sole objective business is to maximize profit.

Advantages Of  Partnership

One of the most powerful and effective relationships you can have in business is a partnership. Why? Because it requires two people to agree to work together. It creates trust, accountability and transparency. It brings passion into the mix. It brings creativity into the mix. It brings excitement into the mix. And most importantly, it brings trust into the mix. Partnerships are so important in business because they are so effective. They have a proven track record of success.

When you partner up with another business, you gain access to their knowledge and connections that are helpful in gaining better leads for your company. This allows you to share leads and resources with each other while helping your company grow. It also helps to improve the flow of communication among partners. Partnering up allows you to expand your reach and gain more clients and customers by sharing your content and gaining more exposure for your business.

By partnering with your clients, you are helping to increase their business and giving them a tool to expand their reach and grow their business, too. Through strategic partnerships, you can both gain from a long term relationship with your clients. As a consultant, you will gain new business through referrals and additional opportunities. As a client, you will get a free marketing expert. In partnership, partners do the following:

1. Partners can share their strengths and weaknesses

2. Partners can balance each other

3. Partners can offer different perspectives

4. Partners can provide mutual support

5. Partners can share skills

6. Partners can make each other better

7. Partners can help each other grow

8. Partners can be mutually supportive

9. Partners can work together as a team

10. Partners can help each other

11. Partners can work to solve problems

12. Partners can be supportive of each other

13. Partners can learn from each other

14. Partners can support each other

15. Partners can support each other in times of need

16. Partners can support each other in times of success

17. Partners can help each other succeed

18. Partners can help each other to become more successful

 Disadvantages Of partnership

There are many advantages to working with a partner, but there are also disadvantages. Partnerships need careful consideration because the two partners have very different needs and goals. If you are considering starting a business with a partner, here are some of the potential problems you may run into:

• Each partner has very different skills sets and priorities.

Partnerships are not easy to build : If you are not careful, you can burn yourself out and spend too much time focusing on the relationship rather than your business.

Partnerships can be stressful : Many people find it difficult to put aside their differences to focus on the business.

• Partnerships can lead to jealousy and feelings of betrayal.

Partnerships have their risks and pitfalls: You don’t want to lose sightof what is really important in the partnership.

Partnerships are often unpredictable: Your partnership may work perfectly for a period of time, but then suddenly fall apart. This can lead to confusion and frustration.

Partnerships can be hard to get off the ground: If you are not careful, you can waste a lot of time and money getting your business up and running.

Partnerships may require legal documentation: There are many things you need to consider when you are deciding whether or not to get a partnership agreement.

5. Corporation

6. Public Limited Company

 Private Limited Company

A private limited company (PLC) is a type of business organization established under the laws of England and Wales. Under the law of England and Wales, a PLC has shareholders and directors, but unlike a public limited company (plc), a PLC is not required to offer its shares to the general public.

A PLC may be formed by an individual or a partnership, a corporation, a trust, a unincorporated association, or any combination of such entities. A PLC differs from a plc in that the directors of a plc are elected by the shareholders, while the directors of a private limited company are not.

A Private Limited Company (PLC) is a business company that operates for profit but is limited to a maximum of 100 shareholders. PLCs are governed under the Indian Companies Act. They’re very similar to Limited Liability Partnerships (LLPs) in the UK. Companies listed on the stock market are called Public Limited Companies.

When you start your own business, you may wonder whether your new company will be subject to taxation, along with all the expenses, and liability associated with being a corporation. Private Limited Companies (“PLC”) are typically the most common legal form of a company, and one that is frequently chosen when starting a business.

PLCs come in two basic forms: Public Limited Companies (“PLC”), which are the most common, and Private Limited Companies (“PLC”). They are both considered corporations and are taxed as such. However, there are a few differences between the two.

Advantages Of A Private Limited Company

 The main advantage is the ability to protect your personal assets. You cannot be held liable for any debts or legal problems that occur during the course of running your business. There are tax benefits too. Your company’s profits are not subject to any corporate tax in case you pay yourself below the minimum wage. Here is a list of the advantages of a private limited company:

– Limited Liability: Protects your Assets

– More Flexible: Can Change Business Strategy

– No More Taxes: Save Thousands of Dollars

– Own Property: Keeps Profits In-House

– Deduct Expenses From Income: Build Wealth Quickly

– Easier to Sell Stock: Raises Capital Without Losing Ownership

– Easier to Raise Money: Access Millions of Dollars

– No Job Security: Start Again If Needed

– No Worker Compensation: No Liability for Unscrupulous Employers

– Tax-Free Growth: Earn Money for Free

 Disadvantages Of A Private Limited Company

Limited companies offer a lot of advantages and disadvantages. They are often more flexible than their corporate counterparts. However, if you don’t know what you’re doing, the disadvantages can outweigh the advantages. The main disadvantages are lower limits to personal liability.

lack of continuity of ownership, inability to offer services, lower level of taxation and lower flexibility to change business policies. In addition, there is no access to shareholders and the structure is less well understood. Below is a comprehensive list of  the disadvatages of a private limited company:

  • Private limited companies have tax advantages
  •  Limited companies have fewer legal rights and obligations
  •  They are not listed on stock markets
  •  In some states they do not have access to public funds
  •  They do not have access to cheap bank loans
  •  They have limited liability.
  • If the business is unsuccessful, the shareholders lose nothing
  •  The shares are not publicly traded
  •  It is difficult to buy shares in a private company
  •  A private limited company is formed by only one person or one group of people
  •  It can be dissolved by its owners
  •  It is not a member of any trade union
  •  It does not have to file an annual return
  •  It can be set up without a prospectus
  •  It does not have to keep accounts

Limited Liability Company

A limited liability company (LLC) is a legal entity that’s designed to give owners protection from personal liability in business. It gives individuals who own the company protection from personal financial liability. That means the business owner can’t be sued for debts or obligations that arise from the operation of the company.

They’re protected by law, but they can still be held personally liable if they act in a manner that harms others. A limited liability company is a kind of business structure used primarily in business ownership. This kind of company is also known as a corporation. An LLC has the same general legal requirements as a regular corporation, but it operates differently from most corporations.

 Advantages Of A Limited Liability Company

The advantages of a limited liability company (LLC) for your business include:

o Being able to offer your services at the same rates as your competitors but without having to worry about a lawsuit arising from a dissatisfied client or a bad experience.

o More flexibility in choosing your business model, including how many employees you want, if you want to incorporate, and if you want to operate the business from home.

o Flexibility regarding the structure of your business, with some states allowing for LLCs to be taxed as partnerships instead of corporations.

o Lower costs and higher profit margins than with a corporation.

o Not being required to file a federal corporate income tax return.

o More control over your personal assets than with a corporation.

Disadvantages of a Limited Liability Company

The disadvantages of a limited liability company (LLC) for your business include:

o Not being able to offer your services at the same rates as your competitors.

o Being unable to offer the same level of protection from lawsuits as a corporation.

o In some states, LLCs are not taxed at the corporate level, which means that you will pay more taxes.

o Your limited liability status may be lost if the LLC is involved in certain types of businesses.

o Your LLC may be subject to laws regarding advertising and other activities which corporations do not have to comply with.

o You must file IRS form 8832 when you are a member of an LLC. This is a more complicated process than filing a Schedule C for a corporation.

o You may be required to pay self-employment taxes on your share of the profits of your LLC.

o The LLC is not a separate legal entity and cannot sue or be sued in its own name.

 Public Limited Company

A public limited company (PLC) is a business structure with limited liability. That means shareholders in a PLC are liable only for the share amount they own, and are protected against losses up to that amount. As an entrepreneur, it is important to understand the difference between a limited company and a private company. Public Limited Companies (PLC) are corporations which have shares of common stock which are sold to the public. A PLC is usually owned by a few people who also own shares in the company.

 Advantages Of A Public Limited Company

It’s no secret that the advantages of incorporating privately are many. There are tax advantages and more money can be made off of your company’s initial capital investment. However, the advantages of incorporating as a public limited company are just as substantial. Here are just a few Major forms of Business Organisations:

1.Low Taxes : If your company is a public limited company, it will not be taxed on profits until it reaches the threshold amount, which is $250,000 in most states. This means that the money that you make after paying your bills, payroll, and other costs can be invested into another business venture without paying taxes.

2. Capital Gain : Exemptions When your company becomes a public limited company, you will be able to sell its shares to another person without paying capital gains tax. You can also use these earnings to invest into another company.

2.Estate Planning : If you want to leave your company to your children or other family members, you can do so with the help of a trust. With a trust, you can protect the value of your company and give the beneficiaries the right to operate the business while still leaving it to them when you die.

3.Limited Liability : If your company becomes a public limited company, the assets of the company are protected from lawsuits by the owners. If any part of the company’s property is damaged due to a third party’s negligence, they are liable for the repairs only up to the amount of the original investment.

4.More Options : You have more options when incorporating as a public limited company. For example, you can have a different type of share structure or ownership structure that will allow you to give more control to the owners.

5. More Potential Investors : As a public limited company, you will be able to raise more money. This means that you can invest in more projects and start other businesses.

Disadvantages Of A  Public Limited Company

Disadvantages of a Public Limited Company (PLC)

1. Limited liability protection – PLCs are limited to just 100 shareholders, so a single loss can be catastrophic for the company.

2. No ability to borrow money – Banks will be reluctant to lend to PLCs because they can’t be certain of a return on the loan.

3. No ability to raise money through debt or equity markets – PLCs are banned from borrowing money through debt and equity markets.

4. PLCs cannot issue dividends – A PLC cannot pay dividends to its shareholders as these can only be paid out of retained profits.

5. PLCs can’t issue preference shares – If a PLC wants to give investors preferred shares, it needs to go back to the Government to ask for permission.

6. PLCs cannot borrow money in the open market – They have to do all their borrowing from the banks.

7. PLCs cannot issue bonds or debentures – PLCs cannot issue bonds or debentures because they don’t have a permanent income stream.

8. PLCs must have at least one director – A PLC has to have at least one director.

9. PLCs can’t be undercapitalised – A PLC can’t be undercapitalised and can’t be in an unprofitable situation.

10. PLCs can’t be listed on the stock exchange – PLCs can’t be listed on the stock exchange because it is a direct competitor to a company.


A corporation is a legal entity created for the purpose of conducting business and carrying out commercial activity. Its members are called shareholders (or owners). There are also members called directors, who run the company and carry out its policies. A corporation is generally thought of as a collection of individuals (people), but the individual owners are usually only part of the picture. In practice, corporations are legally separate entities with their own structure and responsibilities.

 Advantages Of Corporation

The first point of the Advantages Of Corporation is that they offer more protection than a sole proprietor because they will pay for legal costs, lost wages, and legal expenses if the business is sued. Also, there is no personal liability for corporate owners.

The second point is that corporations are usually taxed differently than individuals or sole proprietorships. They also provide their shareholders with the tax benefits that come with ownership.The corporation business has lot of advatntages such as:

forms of Business Organisations

1. Corporations Have The Power To Influence Governments

2. Corporations Have The Power To Make Laws

3. Corporations Have The Power To Change Public Opinion

4. Corporations Can Influence The Mass Media

5. Corporations Are Immune From Government Regulation

6. Corporations Are Taxed Less

7. Corporations Are Often Better Corporate Citizens

8. Corporations Are Generally More Sustainable

9. Corporations Have The Most Impactful Nonprofit Marketing Campaigns

10. Corporations Are Great Partners For Nonprofits

11. Corporations Should Be Treated As Partners

12. Corporations Are Often More Profitable Than Nonprofits

13. Corporations Don’t Need Much Funding 

The corporation is the basic unit of production within an economy. It is not just an abstract entity with legal personality and obligations but a group of people who produce goods and services. They include workers, managers, engineers, administrators, lawyers, doctors, sales representatives, and others. The corporation also includes capital (money and property) and technology.

 Disadvantages Of Corporation 

So what are the disadvantages of becoming a corporation? There are many advantages that come with this new way of being a business. But in the end it comes down to risk, liability, and transparency. some of this disadvantages Include:

1. Shareholders are Not Consumers

forms of Business Organisations

2. Shareholder Value Does Not Always Mean Long-Term Investment

3. Corporations Can’t Survive Without Subsidies From Government

4. Corporate Entities Are Not People

5. Corporate Boards Have Too Much Power

6. Corporations Are A Business Tool, Not A Social Construct

7. Corporations Are Unaccountable

8. Corporations Take Money From The Poor and Give To the Rich

9. Corporations Aren’t Protected by the First Amendment

10. Corporations Are Not Equal Under the Law

11. Corporations Aren’t Accountable to You

12. Corporations Are Destroying Democracy


Business organization can be very important if you want to be successful. A business organization can be one that operates as a sole proprietorship, partnership, corporation, or limited liability company. These organizations differ in their legal requirements, business structure, and tax liabilities. There are many different types of organizations available to you.

Each type has its own advantages and disadvantages as stated above. One thing is for sure: the right business organization is important. The choice you make for your business organization will affect your financial success and business reputation. In order to conduct business, it is important to select the form that best fits your business needs.

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