Explain the different classification of business

Types of Businesses:

American economist Milton Friedman once famously proclaimed that "the business of business is business. " Capitalist economies such as the United States rely on businesses to legally produce capital from the trading of goods and services. There are many types of business entities defined in the legal systems of various countries. Moreover, the types of businesses that exist today can vary by jurisdiction. Primary ownership types of businesses include corporations, cooperatives, limited liability partnerships (LLPs), limited liability companies (LLCs) and sole proprietorships.

Business Ownership Types

The type of business a group or individual creates will influence the legal and tax structure of the entity. The following are some of the most common ownership types for organizations:

• Sole proprietorship: A sole proprietorship is a business owned by one person for-profit, though the owner may hire and manage employees. The business owner has unlimited liability for the debts incurred by the business.
• Partnership: A partnership is a business owned by two or more people. In most cases, each partner has unlimited liability for the debts incurred by the business. The three typical classifications under for-profit partnerships are general partnerships, limited partnerships, and limited liability partnerships.
• Corporation: A corporation is a government-owned, publicly-owned, or privately- owned limited liability business that contains a separate legal personality from its members. It can also be a for-profit or non-profit corporation. Public for-profit corporations are owned by shareholders who elect a board of directors to direct the corporation and hire its managerial staff.
• Cooperative: Often referred to as a "co-op", a cooperative is a limited liability business that can organize as for-profit or not-for-profit. A cooperative differs from a for-profit corporation since members, as opposed to shareholders, share decision-making authority. Cooperatives are typically classified as either consumer cooperatives or worker cooperatives.

Business Industry Types

Businesses also vary by industry due to the wide variety of products and service they offer to the market. The following industry classifications are usually applied to businesses:

• Agriculture and mining businesses are concerned with the production of raw material, such as plants or minerals.
• Financial businesses include banks and other companies that generate profit through investment and management of capital.
• Information businesses generate profits primarily from the resale of intellectual property. This includes movie studios, publishers, and packaged software companies.
• Manufacturers create products from raw materials or component parts, which they then sell at a profit. Companies that make physical goods such as automobiles or pipes are considered manufacturers.
• Real estate businesses generate profit from the selling, renting, and development of properties comprising land, residential homes, and other kinds of buildings.
• Retailers and distributors such as consumer-oriented stores act as middlemen in transporting manufactured goods to consumers. They make a profit by providing sales or distribution services.
• Service businesses offer intangible goods or services and typically generate a profit by charging for labor or other services provided to government, other businesses, or consumers. Typical service businesses include consulting firms, restaurants, and house decorators.
• Transportation businesses deliver goods and individuals from location to location, generating a profit on the transportation costs.
• Utilities produce public services such as electricity or sewage treatment, usually under a government charter.