Business and Trade

The Different Types of Small Businesses Explained

There are over 30.2 million small businesses in the United States alone.

No matter how big companies like Amazon and Apple get, small businesses are an important pillar of the economy and have a continued role to play in their local communities.

And given how many successful small businesses there are, you’ve probably thought of starting your own at one point or another.

But before you go creating your logo and website, you need to learn about the different types of small businesses.

Ready to learn more? Keep reading to find the type of small business that’s right for you.

Freelancer or Sole Proprietorship

Freelancers and sole proprietorships are the most common types of businesses that people start when they decide to start their own company.

The benefit of being a freelancer is that you can set your own schedule and decide which clients to take. Some examples of freelance small businesses include:

  • Graphic designer
  • Freelance writer
  • Wedding or party planner
  • Local house painter
  • Landscaper

Sole proprietorships are similar to freelancers but are registered businesses within their state. Sole proprietorships have registered a business name, can hire employees, and can get business insurance.

Starting a sole proprietorship is how lots of people start running a business with more legal structure but don’t yet have the money to pay the legal fees to incorporate.

Brick-and-Mortar Businesses

Brick-and-mortar retailers include any type of business with a physical location, from dental offices to local restaurants.

Brick-and-mortar companies are also one of the most common types of businesses for sale, and sometimes it’s cheaper to buy a business than start one from scratch.

This is especially true of restaurants. This is because buying a business saves you equipment costs and lets you get a restaurant with an established presence and staff already hired.

E-Commerce Business

Starting a business can be costly if you go the brick-and-mortar route, so many small businesses start out as e-commerce.

You can create a Shopify or WooCommerce Store using pre-built templates to quickly start selling products online.

Plus, you can look into drop shipping, which lets you start an e-commerce business without the cost of inventory.


Believe it or not, a corporation doesn’t have to be huge. In fact, many small businesses are incorporated because they have a type of business where they need to protect themselves legally.

Having a corporation means that the corporation (and not you) is responsible for any legal liability that happens.

Examples of small businesses that tend to incorporate include doctor’s offices, electricians, and food businesses.

Know the Different Types of Small Businesses

Knowing the different types of small businesses can help you decide which small business is right for you, your goals, and your schedule.

Whether you decide to work as a freelancer or set up a brick-and-mortar shop, a small business can be one of the hardest yet most rewarding things you’ll ever do.

For more helpful business tips to help you as you start your small business journey, be sure to check out the rest of our site!

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