Some Types Of Business Organization
- Basic forms:
- Sole Proprietor
- Partnership
- Corporation
- close
- public
- Tax driven intermediate forms: (taxed like a partnership or check the box taxation; limited liability and internal governance like a corporation)
- Limited Partnership
- Limited liability company
- S corporation
- Limited liability driven intermediate forms:
- special close corporation statutes (partnership style governance; corporate limited liability)
- Limited liability company (optional partnership style governance; corporate limited liability)
- Variants (generally similar to business corporations):
- Cooperative (members/shareholders elect board; current profits may be distributed to member/shareholders. Normally, shares may be not sold except to company; shareholders have no access to capital appreciation)
- employee owned
- producer owned
- consumer owned
- real estate (a type of consumer owned coop)
- Condominium
- Mutual Association (consumers elect board, profits distributed as dividend to consumer-members; ordinarily, members have no access to capital appreciation)
- mutual savings bank
- mutual investment fund
- mutual life insurance company
- Not-for-profit corporation (not permitted to distribute profits or capital appreciation)
- membership (members elect board)
- non-membership (self-perpetuating board)
- QUANGOs (Quasi-independent non-governmental organizations)
- Governmental corporations
- Municipal corporations (cities) (citizen elected "board" or equivalent)
- Completely different organizations:
- Labor unions. Federal regulation of labor unions makes them radically different in structure and form from business organizations.
Notes
1. These legal classifications (generally) do not distinguish by size. Thus, both S corporations and close corporations may be enormous operations, while standard C corporations may consist of one shareholder and no employees.
A sole proprietor could employ hundreds of people (and prior to general corporation statutes often did; even today, plaintiff's attorneys, barred from incorporating, sometimes operate large organizations as sole proprietorships).
A publicly traded corporation may employ only a few (e.g., Berkshire Hathaway), while a close corporation may have only one shareholder and no employees at all (a "shell" corporation).
In general, the "shell" corporation and General Motors are subject to the same state law, unless the shell corporation specifically elects close corporation treatment (where available). (Federal securities regulation, however, distinguishes based on the number and dollar volume of securities outstanding (not on the size of the organization).)
2. These legal classifications (generally) do not distinguish by economic function.
A store or producer may organize as a cooperative (e.g., REI, Ocean Spray Cranberries), or even as a not-for-profit (although it may be deemed to have profits for income tax purposes) (e.g., most museum stores). Similarly, a church or school may organize as an ordinary business corporation or a sole proprietorship.
This rule is new: before the mid-19th century, virtually all corporations were organized only for a specific purpose pursuant to specific statutes. The main contemporary exception is the QUANGOs, which usually are authorized by a specific statute for a specific stated purpose.