What are the four different types of minority business structures?

 

(1) Sole proprietorship-

Sole proprietorship is the most simplest organizational structure available for businesses. According to the Internal Revenue Service (IRS), it is one of the most basic form of business in the U.S. Businesses structured as a sole proprietorship allows the owner(s) to have complete control over company operations. However, this type of business provides no protection for business owners, as they can be held personally responsible for their company's debt and financial obligations. They have unlimited liability.

(2) Partnership-

A partnership is constituted when two or more individual join, or partner, together to operate a business. In partnership arrangement, partner has equal share in the net profits and losses of their business. Like a sole proprietor, each partner reports their income on their personal tax return and pays self-employment taxes to the IRS. 

(3) Limited Liability Company (LLC) -

The limited liability structure is contemplated a hybrid or combination as limited liability companies can be formed as corporations or partnerships. The members of LLCs receive the protection from liability and other obligations similar to a corporation. The taxation of LLCs also depends on its structure. Due to its limited protection, some businesses such as banks and insurance companies are restricted from being LLCs.

(4) Corporation-

The most complex and complicated form of organizational structure for businesses is the corporation. This type of business structure segregates the liabilities and obligations incurred by company operations from being the responsibility of the owners. Corporations are legal entities that are regulated by the laws of the state they are set up in. Unlike sole proprietor and partnership businesses, corporations are taxed as separate entities at corporate tax rates. The IRS taxes corporation owners at individual tax rates.