Types Of Businesses

In exchange for money or other goods and services, a business firm employs economic resources to give goods or services to clients. Business organisations occur in various shapes and sizes as well as distinct ownership structures.

Types of businesses

There are three types of businesses:

1.Service businesses

• Intangible products are provided by a service firm (products with no physical form), a firm that provides services, skills, labour, expertise, and other related services in exchange for professional or talent fees.
• Business services, such as accounting, advising, taxes, advertising, engineering, legal, research agency, computer programming, and so on, are examples of service firms.
• Laundry, beauty salons, and photography are examples of personal services.
• Automobile repairs, car rentals, car washes, and parking places are all available.
• Amusement parks, bowling alleys, golf courses, and theatres are all examples of recreational facilities.
• Hospitals and clinics, schools, museums, and banks are just a few examples.
• Hotel and lodging, as well as other services.

2. Merchandising business

This type of company buys things in bulk and resells them at a retail price. “Buy and sell” or “reseller” firms are what they’re called. They profit by selling their items at a higher price than they paid for them.

A merchandising company purchases a product and sells it in its original form. All types of distribution and retail stores, such as department stores, grocery stores, hardware stores, and so on, are examples.

3. Manufacturing business

A manufacturing company, unlike a retailing company, purchases things to use as raw materials to create a new product. As a result, the purchased goods change.

In the manufacturing process, raw materials, labour, and overhead costs are combined. The finished goods are subsequently sold to clients. Here are several examples:

• Food processing includes bakeries and oil mills, canned meat, frozen items, dairy products, and bottled beverages.
• Fabric mills and textile production, using cotton, wool, and polyester, as well as clothing factories, using textile as a raw material.
• Cabinets, tables, and chairs are examples of wood and metal works.
• Refineries, chemical laboratories, and the manufacture of plastics and rubber
• Shipbuilders, aircraft manufacturers, and automobile manufacturers, as well as a slew of additional manufacturers and factories.

Many businesses engage in multiple activities, which are usually separated into distinct departments or divisions.

Consider a tech company that manufactures phones, distributes them through distribution centres (merchandising), and provides repairs and maintenance (manufacturing) (service). A restaurant manufactures a meal, sells a chilled bottle of beer, and provides a sitting space (merchandising) (service).

Types of business structures in India

• The legal framework is an essential component of running a firm, whether you’re on a planned growth path or just getting started. 
• The Companies Act of 2013 requires that every firm in India be registered. Every business must be aware of its alternatives and have a legal structure approved by the Indian government. 
• To operate a business and succeed, one must select the appropriate legal structure from the available options.
• The entity’s goals and the local and central laws where it wants to establish its basis are aligned while choosing the correct legal structure. With well-defined objectives, the entity can choose the optimal legal form for achieving those objectives.

For example, some businesses seek to use:

• Sole proprietorship

A sole proprietorship is a business operated entirely by one individual. Many entrepreneurs establish small enterprises in their names and operate them as single proprietorships. The proprietor of such a business and the establishment are not considered different entities. In India, starting a firm as a sole proprietor requires no formal registration.

• Partnership

Two or more persons form a partnership firm to work together and gain profits. A partnership deed describes each partner’s invested stake and profit-sharing ratios and other aspects of corporate functioning and operations.

• Limited liability partnership

The Limited Liability Partnership Act of 2009 establishes a Limited Liability Partnership. In contrast to partnership firms, partners in an LLP are not subject to infinite business obligations.

• Private limited companies

A private company is described as a corporation with a minimum paid-up share capital as may be stipulated and which, by its articles, is not a public business.

• Public limited companies

A public limited company comprises at least 7 (seven) people and has a minimum paid-up capital. The corporation may be listed on a stock exchange, after which its shares are freely traded. This sort of business is subject to greater legal constraints than a Private Limited Company.

• One-person companies

According to Section 2(62) of the Companies Act 2013, a “one person company” is defined as a corporation with only one member. This is a relatively new invention that allows entrepreneurs to own and manage businesses on their own.

One person can possess all shares, but the firm must be registered with an additional nominated director.

Types of corporations in businesses

• A corporation is a legal entity controlled by its shareholders through shares. Prospective shareholders declare how many shares they own during the incorporation procedure. Corporations enable groups of people to collaborate to benefit. One-person corporations allow proprietors to hold 100% of the company.
• Corporations occur in various shapes and sizes, each with its own set of responsibilities and organisational structures.
• The main difference between each type is how they handle taxes and income. Employees’ labour is often unaffected by the company they work for, with shareholders and executives bearing the brunt of the damage. We define a corporation, explain the incorporation procedure, and discuss the four primary types of companies in this article.

There are four types of corporations in businesses, which are as follows:

• S corporations,
• C corporations,
• Non-profit corporations, 
• Limited liability companies (LLCs) 

These are the four most common types of corporations. However, there are other business forms to consider, some of which may be a better fit for your organisation.

1.C corporations: 

C corporations are taxed separately from their owners by the federal government. For federal income tax reasons, most significant corporations operate as C corporations, allowing them to have an unlimited number of foreign and domestic shareholders. They regard earnings and profit distributions as dividends for tax purposes in the United States.

2.S corporations:

For tax reasons, S corporations pass on business financials such as income, losses, credits, and deductions to shareholders. This type of corporation, like C companies, is governed by the laws of the state in which it is located.

3.Non-profit organisations:

Surplus income is used by nonprofit organisations to achieve goals for various purposes. Instead of dispersing profits or dividends, they utilise this method.

4.Limited liability companies (LLCs)

A written agreement can be used to start a limited liability business by at least one person. The agreement covers different conditions and specifics about the organisation, such as management concerns, profit and loss distribution, and how interests are assigned to others.

Conclusion

This article provides a brief overview of the types of businesses and corporations in India. A business results from one or more people working together to meet a societal need while also making a profit. A business entity is an organisation that uses economic inputs or resources to provide goods or services to customers in exchange for money or goods. Types of businesses include service businesses, manufacturing businesses, merchandising businesses, sole proprietorships, partnerships, corporations, multinational corporations (MNCs), franchises, limited liability companies, and cooperatives.