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Business Structure

A business is defined generally as an organized enterprise or agency characterized by a set of specific activities. Business enterprises can either be for-profit entities acting to meet a social purpose or non-profitable organizations that function primarily to meet a financial need. The activities performed by businesses are usually defined by the nature of the enterprise and the relationships developed between the enterprises. Some key factors that affect the development and growth of a business are technology, marketing, economics, location, government regulation, capital structure and demographics. Understanding the above factors can help managers and business owners to identify opportunities and evaluate opportunities to expand and manage their businesses efficiently and effectively.


In United States, business law was codified during the nineteenth century by the First Congress in the legislative body known as the House of Representatives and the Senate known as the Senate. Today, this body has been reassembled after the passage of many Congresses, including the Second and Third Congresses. However, the body of laws governing businesses in the United States are not identical to those governing corporations. For that reason, it is imperative that businesses register themselves under both state and federal law. There are also differences between how the commercial law applies to partnerships, limited liability companies, corporations, nonprofit corporations and other types of legal entities.

A partnership is often used as an example of a business entity that is subjected to the public’s taxation. Partnerships are considered separate from each other and are tax domiciled separately from the public. A corporation is a type of partnership which is tax domiciled together with its shareholders. The shareholders are considered an investment through which capital is made to benefit the partners. The public is prevented from voting for dividends or other share distribution because they are considered assets of the corporation.

There are several types of partnerships which include general partnerships, limited partnership, joint venture, proprietor-employee, corporate veil and corporation. General partnerships are the most common form of business entity formation in the United States. In this type of agreement, there is a partnership agreement covering the different responsibilities and liabilities of the partners. A limited partnership involves two or more people who become financially and legally connected with one another through a corporation. The profit and loss sharing account are maintained between the partners through the business. They have the same rights and obligations as other shareholders in a corporation.

Limited liability partnerships are another example of business structures commonly adopted by entrepreneurs. This kind of partnership allows limited liability and is incorporated as a business. In a limited liability partnership, the partners will share the liability for debts of the partnership, while avoiding the domicile of the partnership. The business creates a separate legal entity, separate from its shareholders. It is commonly used to avoid personal bankruptcy.

The corporate veil is a legal structure, where a corporation or limited liability company adopts a form of business structure known as a partnership. The partnership is created through an instrument known as partnership deed, by the creation of which each partner becomes the co-owner of the other partner’s business. This enables the partners to avoid personal bankruptcy. In a limited liability partnership, the partnership is considered to be the legal entity and therefore has its own domicile. The partners are obliged to bind themselves by the partnership agreement, so that they are not able to do anything against each other’s legal rights.