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Definition

business structure

Contributor(s): Ivy Wigmore

A business structure is a category of organization that is legally recognized in a given jurisdiction and characterized by the legal definition of that particular category.

Common examples of business structures include corporations, partnerships, holding companies, non-profits, subsidiaries and limited-liability companies. Here are a few examples:

A sole proprietorship is an unincorporated business owned by a single individual. Freelancers and many other self-employed people are, in legal terms, operating a sole proprietor business.

A corporation is a large and complex organization that is owned by its stockholders. The corporation is considered an independent legal entity and, as such, is responsible for its actions and debts. A standard corporation is sometimes known as a C corporation or C corp but is usually just called a corporation unless the distinction is required for clarity.

An S corporation (S corp) is an alternative to the C corp in which the business' profits and losses pass through to stockholders and must be reconciled on their individual tax returns.

A benefit corporation (B corp) is an organization that commits to what is sometimes called the triple-bottom line -- an expanded version of that business concept that includes social and environmental results as well as financial results. To this end, a B corp seeks to  identify social missions and demonstrate corporate sustainability efforts; in return, the organization may be eligible for certain types of legal protection, bidding protection or tax benefits.

This was last updated in December 2015

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