business organization

Business organization refers to the way in which a company or enterprise is structured and managed. The choice of business organization can have a significant impact on how a company operates, its tax liability, and its legal status. In this blog post, we will discuss the different types of business organizations and their advantages and disadvantages.

Types of Business Organization

  1. Sole Proprietorship: A sole proprietorship is the simplest form of business organization, in which a single individual owns and operates the business. The owner is personally responsible for all debts and obligations of the business and has complete control over its operations. This form of organization is easy and inexpensive to set up and is suitable for small businesses with low startup costs. However, the owner is liable for all financial obligations, and it can be difficult to raise capital.
  2. Partnership: A partnership is a business organization in which two or more people share ownership of the business. Partners share profits and losses, and each partner is responsible for the debts and obligations of the business. Partnerships can be general, where partners share equally in the profits and losses, or limited, where some partners have limited liability. Partnerships are relatively easy to set up and can be advantageous for businesses that require multiple skill sets. However, there can be disagreements among partners, and personal liability is a risk.
  3. Corporation: A corporation is a separate legal entity from its owners. The owners, or shareholders, invest in the company by purchasing shares of stock. A board of directors oversees the corporation\’s operations, and officers manage day-to-day operations. Shareholders are not personally liable for the corporation\’s debts and obligations, and it is easier to raise capital through the sale of stock. However, corporations are more complex and expensive to set up and maintain, and they are subject to more regulations and taxes.
  4. Limited Liability Company (LLC): An LLC is a hybrid between a partnership and a corporation. It provides the limited liability of a corporation while allowing for the flexibility and tax benefits of a partnership. Members of an LLC are not personally liable for the company\’s debts and obligations and can choose to be taxed as a partnership or corporation. LLCs are relatively easy to set up and maintain, and they offer greater flexibility in management than a corporation. However, they may not be suitable for companies that plan to go public or need to raise large amounts of capital.

Choosing the right business organization is an important decision that can have long-lasting effects on a company\’s success. It is essential to consider factors such as liability, taxation, management, and capital requirements when selecting a business organization. It is also important to consult with legal and financial professionals before making a final decision. By carefully considering these factors, a business owner can choose the organization that best suits their needs and maximizes their chances of success.

There are two major types of group business organisations. These are private enterprises and public enterprises.
(a) Private enterprises:


A business organization can be defined enterprise set up by an individual or group of individuals, the government or its agencies for the main purpose of making a profit and providing goods and services for the satisfaction of human wants.

All business organisations, be they small or large, irrespective of the ownership structure, have one thing in common provision of goods and services to me the numerous needs of the people.

Summary of the Types of Business Organisations 1 The summary of the types of business organisation is given in Table 7.1

No. of Owners

Sole Proprietorship
Olakunle Enterprises

2 – 20
Ebun & Damian Enpterises

  1. migration
  2. population
  3. market concept
  4. money market
  6. how companies raises funds for expansion



Private Limited Company
2 – 50
Sammy Enterprises Nig. Ltd.

Public Limited Company
7 to infinity
A.G Leventis Nigeria Plc.

Public Corporation
By Government
Nigerian Telecommunication

Cooperative Societies
Any number of persons
Eguje Cooperative, Thrift and Credit Society

Private Enterprises
Public Enterprises

Private enterprises are owned by individuals
Public enterprises are owned by the government

Capital is provided by private individuals
Capital is provided by the government (e.g. local, state or federal).

Their major objective is to maximize profits
Their major objective is to provide social
Services to the people.

They are controlled by the owners or directors appointed by the owners
They are controlled by the Board of Din appointed by the government.

They do not enjoy any monopoly
They enjoy some form of monopoly.

They are established by ordinary registration or by incorporation
They are established by acts of parliament

They require a small amount of capital to set up

They require a huge amount of capital to set up

They are more efficient in the management of enterprises
They are less efficient in the management of enterprises.

Decision-making can easily be taken without rigorous consultation
Decision-making is always subjected to rigorous consultations.

Owners bear losses suffered by private enterprises
Taxpayers bear losses suffered by public

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