The characteristics of the four basic forms of business ownership are described below :
1. A sole proprietorship is a business that is owned, and usually managed by a single individual.
2. A partnership is a voluntary agreement under which two or more people act as co-owners of a business for profit. In its most basic form, known as a general partnership, each partner has the right to participate in the company's management and share in profits- but also has unlimited liability for any debts the company incurs.
3. A corporation is a business entity created by filling a form(known in most states as the articles of incorporation) with the appropriate state agency, paying the state's incorporation fees, and meeting other requirements.
A corporation is considered to be a legal entity that is separate and distinct from its owners. Because of a corporation's status as a separate legal entity, the owners of a corporation have limited liability- meaning they aren't personally responsible for the debts and obligations of their company.
4. A limited liability company(LLC) is a hybrid form of business ownership that is similar in some respects to a corporation while having other characteristics that are similar to a partnership.
Like a corporation, a limited liability company is considered a legal entity separate from its owners. Also like a corporation, an LLC offers its owners limited liability for the debts of their business.
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