Question

What are the six types of organizations, and what are their major differences

Answer 1

The six types of organizations are:-

1. Sole proprietorship

This is a business owned by a single person which can be considered as an individual contractor as well as a separate entity. This is the most common type of organization.

2. General partnership

This is a business where there is a formation of a partnership between two/three or more partners that come into a contract to co-own a business.

3. Limited partnership

This is a business where there is a structure that has one general partner and one limited partner. A limited partnership allows one party to have limited liability in the affairs of the business and only requires one general partner.

4. “C” corporation

This is a type of organization where the profit it earns is taxed separately from the owners with respect to the internal revenue code.

5. “S” corporation

This is a type of organization where the profit taxed is passed through all the entities. This allows the business owners do not have to file taxes on the business level.

6. Limited liability company or LLC

Is a type of company where the structure is a hybrid of a sole proprietorship, general partnership and limited partnership, allowing the company to be able to protect the owners from being responsible for the debts and cases that can cause the business to be sued.