Have you ever wondered how companies categorise themselves? Among the surplus number of businesses that pop up every day to cope with the ever-changing needs coming from the market every day. From big multinational corporations to small-scale domestic businesses, despite all of the differences in types of goods and services are located within a set of 4 specific types of businesses. Here are the 2 of them. Although they shared differences in the operation process, there are still some similarities among them, an example would be the need for sap training & certification programs Malaysia companies are preferring. 

Sole Proprietorship

This kind of business is owned only by one person, making it an unincorporated company. Thus, this is the most simple type of business that is accompanied by the least level of financial and legal protections for the business owners. Separating Sole Proprietorship companies is also the fact that the companies here will not create a separate identity for the business like in partnerships and corporations companies. Resulting in both the company and the owner relying on each other’s identity. Hence, the owner’s reputation could bring up or push down the business as the owner is completely liable for almost all liabilities incurred by the company. 

Subsequently to the heavy mutual dependency between the owner and the business, this option also offers absolute control over the company. Additionally, a Sole Proprietorship is rather a simple and inexpensive establishment in the beginning. Another perk coming along is tax benefits as the company profits are considered the owner’s personal properties with fewer regulations within the company. 

Partnership

As suggested by the name, partnership businesses are those companies owned by at least two to more people, regarding themselves as partners. Similar to Sole Proprietorship, incomes generated by the company activities are considered the owners’ income so they achieved the tax advantage of only being taxed once. Another similarity is that the company’s images are also dependent on the owners’ liabilities. Nonetheless, there are some differences with Partnership businesses as they are categorised into three types of partnership.

General partnerships

Is the simplest partnership business model that requires only a few upkeep costs. Within the general partnership, each partner is accountable for participating in the business operations with an unlimited liability among them. Meaning that any person within the partnership group could repay the partnership liability with their assets. Making the partnership members take responsibility for the doings of each other’s actions. 

Limited partnerships

Within limited liability, the word “limited” suggests that there will be limited partners that could only take on as much responsibility as their financial rank within the partnership. Resulting in the person having no actual power in intervening in the company management decisions and no direct control over the firm’s activities. However, there should be at least one general partner that takes over the unlimited liability for the partnership. Meaning this personnel will manage the company’s operations. 

Limited Liability Partnerships

This is a bit like General Partnership as partners are responsible for the management of the company operations. However, the difference here is that partnership individuals will not have to be responsible for other actions or the company’s debts.