The Most Common Types of Business Organization

The functions of most executive management teams are very similar for most businesses, and they will not

differ in any significant manner based on how they may be structured or organized. However, the legal

structure of any company will have a substantial impact on its operations, and it therefore deserves a

significant amount of analysis and discussion. The four most common forms of business organizations are the

following:

1. Sole proprietorships

2. Partnerships

3. Corporations

4. Hybrids, such as limited liability companies (LLCs) and limited liability partnerships (LLPs)

The vast majority of businesses take the form of a proprietorship. However, based on the total dollar value of

combined sales, more than 80 percent of all business in the United States is conducted by a corporation.

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Because corporations engage in the most business, and because most successful businesses eventually

convert into corporations, we will focus on corporations in this chapter. However, it is still important to

understand the legal differences between different types of firms and their advantages and disadvantages.