Forms of Business
In accounting business refers to an organization which carries out activities such as purchasing goods and services from other businesses or manufacturing goods and services by its own and then selling them to consumers with an intention that the business earns profit thus increasing the wealth of the owner(s) of that business.
Business can be owned by one person, or by a small group of people who have agreed to share profits, or by tons of people who own small portion of the business. Thus, according to number of owners, businesses can be classified as follows:
- Sole Proprietorship: A business owned by a single person.
- Partnership: A business owned by few people who mutually agree to share profits of the business.
- Corporations: A business owned by tons of people, each owning a small portion of the business.
Written by Obaidullah Jan, ACA, CFA <--- Hire me on Upwork