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Business is the activity of making one’s living or making money by producing or buying and selling goods or services. Anyone carrying on an activity that earns them a profit is doing business or running a business, and perhaps this is why there is a misconception that business and company is the same thing. A business name structure does not separate the business entity from the owner, which means that the owner of the business is responsible and liable for all debts incurred by the business. If the business acquires debts the creditor or creditors can go after your personal possessions. A business structure does not allow for corporate tax rates. The proprietor is personally taxed on all income from the business.
A company on the other hand, is a separate legal entity and provides for limited liability as well as corporate tax rates. A company structure is more complicated and expensive to set up, but offers more protection and benefits for the owner. Sole proprietorship: A sole proprietorship, also known as a sole trader, is owned by one person and operates for their benefit. The owner operates the business alone and may hire employees.
Partnership: A partnership is a business owned by two or more people. In most forms of partnerships, each partner has unlimited liability for the debts incurred by the business. Corporation: The owners of a corporation have limited liability and the business has a separate legal personality from its owners. Corporations can be either government-owned or privately owned. Cooperative: Often referred to as a “co-op”, a cooperative is a limited-liability business that can organize as for-profit or not-for-profit. A cooperative differs from a corporation in that it has members, not shareholders, and they share decision-making authority. Franchises: A franchise is a system in which entrepreneurs purchase the rights to open and run a business from a larger corporation.