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Business structures
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Business structures include sole trader, partnership, and company. A sole trader is an individual with unlimited liability, easy to set up, but risky financially. Partnerships involve shared ownership, decision-making, and profits/losses, though they also have unlimited liability. Companies are separate legal entities with limited liability for shareholders, allowing easier expansion and fundraising but requiring more compliance. In Italy (2011), 63% of businesses were sole traders, 17% partnerships, and 18% companies.
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- Business structure: entity legally recognized in a given jurisdiction; key elements include ownership, liability, funding opportunities, decision-making responsibilities, and taxation.
- Sole trader: one owner with unlimited liability, easy to establish, but risky due to personal financial responsibility for business debts.
- Partnership: shared ownership, profits, and losses among partners; can be informal, but limited by mutual agency and profit-sharing disputes.
- Company: separate legal entity with shareholders having limited liability, unlimited life span, and easier fundraising opportunities compared to sole traders and partnerships.
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