Understanding the Legal Structures of Businesses

A business is basically an establishment where individuals work under a particular umbrella. In a normal business, individuals work to either make and sale goods or services to others. Others may also buy the goods and services sold by others. The business owner, meanwhile, is the individual who typically hires workers for such work.


These businesses can be either personal or corporate. A personal business involves a person who owns the business but does not hold a managerial position. These are known as solo practitioners or self-employed contractors. Examples of these are accountants, doctors and lawyers. Corporate business entities, meanwhile, are businesses that are formally established as corporate legal entities with officers who hold managerial and executive officer positions.

While solo practitioners and corporations can operate in isolation, larger business entities usually incorporate to protect themselves from risks posed by their own stock ownership. This protects the owners of the firms from possible losses in their stocks. They can also use incorporation to avoid paying taxes on their shares. All of these tactics allow the business to shield itself from legal liability. Business structures, therefore, can help to ensure that the company is able to weather any economic storms. It is important, however, for individuals and corporations alike to engage in market research to understand the legal structure of businesses so that they can better manage their own finances.