Know The Classification Of Business

Business is an organization or set-up that engages in selling and purchasing of goods and services. A business could be of various types, according to the type of profit it bears as well as the type of activities it is engaged in. It could be profitable as well as non-profitable. A profitable organization is the one that makes profit mainly by selling goods and services whereas a nonprofit organization is the one that wants to serve the community so they earn through, charity, donation, art, or subscription. Starting a business requires a person to go through a lot of procedure including getting a plan, license, and registration before it could be legally approved.

Types of businesses:

Classification of businesses depending on the ownership and taxation liability:

  • Sole proprietorship: It is owned and operated by a single person.It isone of the easiest organizations to set up. All the profits as well as the taxing liabilities goes to this person (the founder) alone. They have a much more control on their business as compared to other types of business.
  • Partnership: This type of businessis operated by two or more people together,As the name suggests, these partners share the responsibility of both profits and losses.
  • Corporation: A corporation is owned by group of people called shareholders. In this type of organisation, the corporation as a whole is responsible for thefinancial liabilities, not the shareholders.
  • Limited liability Company (LLC): This type of organization not only allows the owner to share the profit among them but also protect them from personal liability of the businesses.


Classification of enterprises based onbusiness size:

  • Small business: These businesses are owned by a single person or a small group of people and their employee size are not more than 100. The profit gained by this kind of organization is low but they are enough to make a livelihood. Family-owned restaurant or home owned company are some of the examples for small business.
  • Medium-sized business: These types of businesses are established on a much larger scale than small businesses. As a result, they rake better revenue and their employee numbers are also larger ranging from 100 to 999 people. They are owned by their founders, so the decisions are mostly made by them. However, they do hire people with management skills to distribute some of the responsibilities.

Large business: A large business employs more than 1000 people. It works as a corporate. Their revenues rake in millions.This corporation are usually spread throughout the world. They have distinct departments like finance, human resources, and marketing with their own department heads. Corporate owners do not manage their own businesses; instead they rely on the board of directors that are voted to make the decisions.