The four types of business are sole proprietorships, partnerships, limited liability companies, and corporations. Each has its own advantages and disadvantages.
Sole proprietorships are the simplest and most common type of business. They are owned by one person and have no legal distinction from their owner. This means that the owner is personally liable for all debts and obligations of the business. Partnerships are similar to sole proprietorships, but there are two or more owners. Like sole proprietorships, partnerships have no legal distinction from their owners, meaning that the partners are personally liable for all debts and obligations of the business. Limited liability companies (LLCs) are a more complex type of business entity that offers its owners limited liability protection. This means that the owners' personal assets are protected from being used to pay off debts or obligations of the LLC. Corporations are the most complex type of business entity. They offer their shareholders limited liability protection and have many other benefits, such as being able to raise capital through the sale of stock. However, corporations also have some disadvantages, such as double taxation (the corporation pays taxes on its profits and then shareholders pay taxes on their dividends).