A business is defined in the Merriam Webster’s Collegiate Dictionary Tenth Addition as: “a corporation organized for the conduct of commercial, financial, or other business affairs”. A business is further defined in the United States Patent and Trademark Office (“USPTO”) definition of a business as: “A business enterprise for the conduct of commercial activity designed to generate revenue”. A business can also be defined in the United States Small Business Administration (“USDA”) definition of a business as: “A commercial entity for the conduct of trade and business”. A business can also be defined by a grant in title 16 of the United States Code which states that: “the term ‘business’ includes any franchise, partnership, company, government trust, association or institution that provides services for the production of surplus inventory of a business enterprise”.
A partnership is established for the benefit of all the partners. Each partner has a right, and the need, to participate in the management and control of the partnership. A business comes under the definition of a partnership in United States v.oki incorporator case. In this case, a corporation was set up for the benefit of local families so that they could earn reasonable profits from their valuable assets.
A corporation is created by filing Articles of Organization with the Secretary of State of Tennessee. All corporations must file an initial statement of information with the Secretary of State of each State in which they propose to do business. All corporations have a General Operating Agreement, which is adopted as the legal structure and bylaws.
There are three basic types of corporations in United States namely: C corporation, S corporation and Partnership. A partnership is legally created only when the partners combine their assets and invest their time or money into the venture. The corporation is created when one person or group of people unite to form a legal business or to carry on a particular activity in the form of business. The partnership agreement is considered as the place where all the debts of the partnership are settled including the debts of all the partners.
Generally speaking, a sole proprietorship is one in which all the profits are shared by the partners. The sole proprietor is allowed to do whatever he/she wants as far as running the business. He is not required to share any profits with anyone. A partnership on the other hand is formed when there exists a majority of the partnership’s stock ownership. The profit made by the business is then shared by the other members of the partnership.
There are four types of business partnerships namely general partnership, limited partnership, joint venture, and corporation. A general partnership is formed when two or more people enter into a transaction with the intention to enter into a business relationship with each other. In case of a general partnership, each partner is regarded as a principal. A limited partnership is formed when two or more people enter into a transaction in which each partner is regarded as a partner.
Joint-venture partnerships are similar to limited-liability companies. However, they create a partnership when two or more people come into a business association. These business associations are similar to limited-liability companies, except that partnerships cannot exceed the value of their investment.
Corporations are formed in the same way as other companies. Each shareholder is responsible for contributing his/her capital and receives dividends based on the value of his investment. A corporation also has limited liability. It is different from a partnership in that a corporation is a separate legal entity and is not governed by a partnership agreement. Unlike a partnership, there is no requirement that the corporation is publicly held.