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Profit motive organizations fall in three broad categories:

  1. Sole trader (sole proprietor)
  2. Partnership
  3. Limited Liability Company

Sole Trader

Sole trader is dictatorship where single person pursues business activities for his/her own economic well-being.

Partnership

Partnership involves participation by more than one person.

Limited Liability Company

Limited liability company is of two types:

  1. Public Limited
  2. Private Limited

Public limited company is listed in stock exchange or market.

Private limited company is not listed in stock exchange.

Public limited company should not be confused with public sector organizations. Public sector organization is run by government.

Both public and private limited companies are separate legal entity. Limited means shareholders have limited liability for his/her debts to the amount of capital invested in the form of shares in the company.

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