Types of business entity
This article may not have a worldwide view of the subject. (May 2014)
A business entity is an organisation which sells a product or service, usually to make a profit. Different countries have different types of business entity. Most countries have similar types of business entity. The following list has a few examples of business entities:
- Private company limited by shares (usually shortened to 'Ltd.'). Private limited companies are split into shares, small parts of the business that belong to people who buy them. Shareholders have limited liability, meaning when they borrow money and need to repay this, they only have to repay an amount which is agreed on before this. Shares cannot be offered to the general public.
- Public limited company (usually shortened to 'PLC'). Public limited companies are also split into shares. Unlike private limited companies, these shares can be sold and traded to the public. Just like private limited companies, shareholders (people who own shares) have limited liability.
- Limited liability partnership (usually shortened to 'LLP'). Limited liability partnerships are owned by two or more people. These people have signed an agreement on how they will run the business, and how the profits (the money made) will be split. All partners in an LLP have limited liability.
- Sole proprietorship is the simplest business entity, with one person as the sole owner and operator of the business. Freelancers, consultants and other service professionals commonly work as sole proprietors, but it’s also a viable option for more established businesses, such as retail stores, with one person.
- "Set up a private limited company". www.gov.uk.
- "Incorporation and names". companieshouse.gov.uk.
- What is a limited company?
- "Companies House: guidance for limited companies, partnerships and other company types". companieshouse.gov.uk.