Answer
Sole proprietorship, partnership, and corporation.
Work Step by Step
A $\textbf{sole proprietorship}$ is an organization owned and controlled by one person, a partnership is owned by two or more individuals, and a corporation is a separate legal entity owned by stockholders.
Sole proprietorship:
In sole proprietorship, the owner is responsible for all actions and operations of the business. He is very independent so that he need not seek an opinion of the third party in making business decisions. There are less formalities to be fulfilled for forming a proprietorship. Since there is only the owner is involved, the uses of large pool of capital and expertise are very limited. The profit from the business need not be shared by the owner to another person. The losses from the business has to be born by the owner himself.
$\textbf{Partnership}$
In partnership, the partners are bound by a written agreement, called partnership deed. The partners can share profit or loss among themselves based on this agreement. Due to the involvement of two or more persons, the uses of capital base and expertise are more than that in case of proprietorship. The partners cannot make decisions of their own. They have to seek the opinion of the other partners in making decisions. The formalities of formation are higher than that of proprietorship but lower than that of corporations.
$\textbf{Corporation}$:
In case of corporation, there are two parties - members and management.
Members are the owners of the corporation. Management executives are the agents of members. Management run the business of the corporation on behalf of members. One of the success factors of the corporation include the expertise of management in running the business operations. Since there are many members, the capital availability is huge. The business decisions are taken by the management. They have to report the result of business operations to the members periodically. The liability of the members of the corporation are limited up-to their capital. In the event of loss, the members may even lose their entire capital. The formalities for forming and running a corporation are very complex.
