The United States has one of the largest and most dynamic market economies in the world, built largely upon the activities of for-profit organisations. These businesses range from small, independently owned enterprises to vast multinational corporations listed on global stock exchanges. While they differ in size, structure and sector, they share a common purpose: to generate profit for their owners or shareholders.
For-profit organisations in the USA operate within a legal and regulatory framework that encourages entrepreneurship, innovation and competition. According to Mankiw (2021), market economies rely on private enterprise to allocate resources efficiently through supply and demand mechanisms. This case study examines four key forms of for-profit organisations in the United States: sole traders, partnerships, private limited companies and public limited companies, highlighting real-world examples and analysing their economic and managerial significance.
1.0 Sole Traders – Individual Ownership and Control
A sole trader (often referred to in the USA as a sole proprietorship) is a business owned and managed by one individual. It is the simplest and most common form of business structure in the United States (Scarborough and Cornwall, 2019). The owner retains full control over decision-making and receives all profits, but also bears unlimited liability for debts and legal obligations.
Example: Local Independent Businesses
Across the United States, millions of small businesses operate as sole proprietorships. Examples include independent hair salons, food trucks, freelance graphic designers and small retail shops. For instance, a self-employed web designer in California may operate as a sole proprietor, managing clients, finances and marketing independently.
The advantages of this structure include:
- Full managerial control
- Simple tax arrangements
- Low start-up costs
However, unlimited liability means that personal assets may be at risk if the business fails. As Atrill and McLaney (2019) note, risk exposure is a key consideration in selecting a business structure.
Despite the risks, sole traders are vital contributors to the US economy. According to the U.S. Small Business Administration (SBA, 2023), small businesses account for a significant proportion of employment and innovation in the American economy.
2.0 Partnerships – Shared Ownership and Responsibility
A partnership is a business owned by two or more individuals who share profits, responsibilities and decision-making. In the USA, partnerships may take several forms, including general partnerships and limited partnerships (Miller, 2017).
In a general partnership, all partners share management responsibilities and unlimited liability. In contrast, a limited partnership includes at least one general partner with unlimited liability and one or more limited partners whose liability is restricted to their investment.
Example: Law and Accounting Firms
Many professional services firms in the United States operate as partnerships. For example, major law firms such as Skadden, Arps, Slate, Meagher & Flom LLP function as limited liability partnerships (LLPs). Partners share profits while limiting personal liability through specific legal arrangements.
The partnership model promotes collaboration and pooled expertise. According to Deakins and Freel (2020), partnerships are particularly effective in professional sectors where trust, reputation and specialised knowledge are central to competitive advantage.
Advantages of partnerships include:
- Shared financial burden
- Broader skills base
- Joint decision-making
However, disagreements between partners and shared liability risks may create management challenges.
3.0 Private Limited Companies (Ltd) – Separate Legal Personality
In the United States, the equivalent of a private limited company (Ltd) is typically referred to as a private corporation or limited liability company (LLC). These organisations are recognised as separate legal entities, meaning the business is legally distinct from its owners (Cheeseman, 2019). Shareholders or members enjoy limited liability, protecting personal assets from business debts.
Example: Cargill, Incorporated
Cargill, one of the largest privately held companies in the United States, provides an example of a private corporation. Despite generating billions in annual revenue, Cargill remains privately owned and does not trade shares publicly.
The key features of private limited companies include:
- Limited liability protection
- Perpetual succession
- Restricted transfer of shares
Private companies often prioritise long-term strategic goals over short-term market pressures. According to Arnold (2022), privately held firms may benefit from reduced regulatory disclosure requirements compared to publicly traded corporations.
Another example is Mars, Incorporated, the global confectionery manufacturer. As a private family-owned company, Mars can pursue long-term sustainability strategies without direct shareholder pressure from stock markets.
4.0 Public Limited Companies (PLC) – Public Ownership and Share Trading
In the United States, the equivalent of a public limited company (PLC) is known as a publicly traded corporation. These organisations issue shares that are bought and sold on stock exchanges such as the New York Stock Exchange (NYSE) or NASDAQ.
Public corporations are subject to strict regulatory requirements under the Securities Act of 1933 and oversight by the Securities and Exchange Commission (SEC) (SEC, 2023). They must publish audited financial statements and disclose material information to protect investors.
Example: Apple Inc.
Apple Inc. is one of the most recognisable publicly traded corporations in the United States. As a public company, Apple raises capital by issuing shares and bonds, enabling large-scale investment in research, development and global expansion.
Public limited companies benefit from:
- Access to substantial capital
- Enhanced credibility
- Transferable shares
However, they also face:
- Increased regulatory scrutiny
- Shareholder pressure for quarterly performance
- Risk of hostile takeovers
Tricker (2019) highlights that strong corporate governance is essential in public companies to manage agency conflicts between managers and shareholders.
5.0 Comparative Analysis of Structures
Each business structure offers distinct advantages and challenges:
| Structure | Liability | Ownership | Capital Raising | Example |
| Sole Trader | Unlimited | One individual | Limited to personal funds | Freelance consultant |
| Partnership | Usually unlimited (varies) | Two or more individuals | Moderate | Law firm |
| Private Limited Company | Limited | Private shareholders | Private investment | Cargill |
| Public Limited Company | Limited | Public shareholders | Stock market | Apple |
The choice of structure depends on factors such as risk tolerance, capital requirements and long-term strategic objectives.
6.0 Economic Significance in the USA
For-profit organisations in all forms are central to the US economy. They contribute to:
- Employment generation
- Tax revenues
- Innovation and technological advancement
- Global competitiveness
According to the U.S. Bureau of Economic Analysis (BEA, 2023), corporate activity forms a major component of national GDP. Large corporations such as Microsoft and Amazon drive technological progress, while small businesses foster community development and entrepreneurship.
Porter (1985) argues that competitive advantage arises from innovation and value creation, both of which are stimulated by profit-oriented enterprise.
The United States demonstrates the diversity and dynamism of for-profit organisational structures. From sole traders managing independent enterprises to multinational public corporations trading on global exchanges, each structure serves a unique economic purpose.
While sole traders and partnerships emphasise personal control and collaboration, private and public corporations provide limited liability and greater access to capital. Regardless of structure, the underlying objective remains consistent: to generate profit while sustaining growth and competitiveness.
Understanding these organisational forms provides valuable insight into how the American economy functions and why entrepreneurship remains a cornerstone of national prosperity.
References
Arnold, G. (2022) Corporate Financial Management. Harlow: Pearson.
Atrill, P. and McLaney, E. (2019) Accounting and Finance for Non-Specialists. 11th edn. Harlow: Pearson.
Cheeseman, H.R. (2019) Business Law. 10th edn. Boston: Pearson.
Deakins, D. and Freel, M. (2020) Entrepreneurship and Small Firms. 8th edn. London: McGraw-Hill Education.
Mankiw, N.G. (2021) Principles of Economics. 9th edn. Boston: Cengage.
Miller, R.L. (2017) Business Law Today. Boston: Cengage Learning.
Porter, M.E. (1985) Competitive Advantage. New York: Free Press.
Scarborough, N.M. and Cornwall, J.R. (2019) Essentials of Entrepreneurship and Small Business Management. 9th edn. Harlow: Pearson.
Securities and Exchange Commission (SEC) (2023) Introduction to Public Companies. Available at: https://www.sec.gov.
U.S. Bureau of Economic Analysis (BEA) (2023) National Economic Accounts. Available at: https://www.bea.gov.
U.S. Small Business Administration (SBA) (2023) Small Business Economic Impact Report. Available at: https://www.sba.gov.
