Types of Business Ownership

What is business ownership?

The legal framework that governs the operation and ownership of a firm is referred to as business ownership. It outlines the obligations, liabilities, and rights of all parties involved in the business. Every form of business ownership, including corporations and sole proprietorships, has advantages and disadvantages of its own, which you can read about later in the article. But first, let’s explain and define the different types of ownership business.

Types of business ownership

1. Sole trader 

The most basic type of business ownership is a sole trader, in which just one person owns and runs the company. The owner has total control over this arrangement, and tax filing is made simpler. But all of the company’s duties and debts are directly owed by the owner.

2. Private limited company (LTD)

A private limited company is a type of business structure commonly used by entrepreneurs and small to medium-sized enterprises (SMEs). In this structure, the company’s ownership is held by shareholders, but there are restrictions on the transfer of shares. These restrictions typically prevent shares from being freely traded on the open market, unlike in public companies.

3. Partnership

A partnership is when two or more people jointly own a company. They can be limited partnerships, in which one partner has limited liability, or general partnerships, in which partners share earnings and liabilities equally. In addition to providing varied skill sets and shared decision-making, partnerships also carry shared risks and the possibility of disagreements.

4. Limited Liability Company (LLC)

An LLC offers limited liability to its members and permits flexible management structures by fusing aspects of corporations and partnerships. Small firms favor it because it offers indirect taxation and personal asset protection.

5. Corporation

A corporation is a distinct legal entity that is held by investors. It helps raise money through the selling of stocks and provides its owners with minimal liability protection. Corporations offer stability and an endless existence while adhering to intricate regulatory constraints.

6. Cooperative

Members of cooperatives own and run the businesses, sharing in the gains and advantages. They function according to democratic ideals and give priority to the requirements of their members. There are cooperatives in several industries, including banking, retail, and agriculture.

Pros and cons in types of business ownership:

Understanding the advantages and disadvantages of each business ownership type is essential for making informed decisions. Here’s a brief overview:

Sole proprietorship

• Easy to establish
• Complete control
• Unlimited liability

Partnership

• Shared decision-making
• Diverse skills
• Shared liabilities

LLC

• Limited liability
• Flexible management
• Complex formation

Corporation

• Limited liability

• Capital raising
• Regulatory requirements

Cooperative

• Member benefits
• Democratic control
• Limited scalability

Regardless of your ownership structure; sole proprietor, partner in a partnership, or shareholder in a corporation, the performance of your company can be greatly impacted by the choice of ownership structure. You can focus on reaching your entrepreneurial objectives and simplify business operations with OneMoneyWay’s all-inclusive financial solutions.

Solutions for business accounts with OneMoneyWay

Securing trustworthy banking services is crucial when you start your entrepreneurial journey. Designed with small businesses and entrepreneurs in mind, OneMoneyWay provides all-inclusive business account solutions. Our platform gives you the tools you need to handle your money effectively by offering the services you need including business accounts, cards, currency conversion, SEPA, Swift, and more.

FAQs

Is OneMoneyWay a bank?

No, OneMoneyWay is not a bank. However, we offer a wide range of financial services, including business accounts, cards, and currency conversion, akin to traditional banks.

Can I open a business account with OneMoneyWay?

Yes, OneMoneyWay provides business accounts designed to meet the needs of small businesses and entrepreneurs in the UK.

What makes OneMoneyWay different from traditional banks?

OneMoneyWay combines the convenience of digital banking with personalized service, catering specifically to the requirements of small businesses and entrepreneurs.