How to Choose the Right KYB Business Type?
Last updated: 07/30/2025
Content List
🏢 I. Standard Business Entities
These are the most common business types. They are profit-oriented enterprises established and operated legally by individuals or companies.
Three subtypes:
🔹 Private Company
Shareholders can be individuals or companies. Ownership and profit are allocated based on contribution. Shareholders’ rights and duties are defined by agreement or articles of association. Shareholders have limited liability based on their investment. Personal assets are protected.
🔹 Professional Firm
Shareholders must hold specific professional qualifications (such as lawyers, accounting firms, etc.. Please note that many law and accounting firms operate under a partnership model), and equity is allocated not only based on capital contribution, but also on professional competence.
🔹Offshore Company
They are typically registered overseas (e.g., Seychelles or the British Virgin Islands), with global shareholders, minimal identity and ownership restrictions, and flexible equity structures. This business type is commonly used for tax planning or cross-border investments.
🏢 II. Large Enterprises
Large in scale and well-resourced, some are state-owned or government-controlled, significantly exceeding industry averages in headcount, assets, and revenue. These businesses are larger in scale and often state-controlled. They have above-average resources, workforce, and revenue.
Three subtypes:
🔹Public Company
Shares are publicly traded. Investors include individuals and institutions. It is often controlled by major or controlling shareholders.
🔹State-Owned Enterprise
Owned or controlled by government bodies, fully or partially. It usually operates to fulfill government policy or manage critical industries.
🔹Sovereign Entity
Directly owned or controlled by a nation-state. It is typically involved in strategic sectors like energy, finance, or telecommunications.
🧍 III. Sole Proprietor / Single-Person Company
What does it mean? A small-scale business run by an individual or family, with low entry barriers.
Two subtypes:
🔹Sole Proprietorship
Operated by an individual or family; no shareholding structure involved.
🔹Single-Person Company
100% owned and fully controlled by one person. Unlike a regular company owned by one person, this structure bears unlimited joint liability—meaning the owner is personally liable for all debts.
🤝 IV. Partnership Entities
A business formed by two or more individuals who jointly invest, operate, share profits, and bear risks.
Four subtypes:
🔹General Partnership
Formed by general partners (GPs) and limited partners (LPs). GPs manage the business and assume unlimited liability. LPs are liable only up to their investment and share profits per agreement.
🔹Investment Partnership
Focused on investment as the main activity. Partners share profits based on capital contribution and agreements. This structure is often managed by professional investors.
🔹Limited Partnership Private Equity Fund
Operated by GPs, with funding from LPs. Risks and returns are shared based on agreements. GPs usually hold a portion of the fund to align incentives.
🔹Collective-Owned Enterprise
Owned and shared by collective members, with profits distributed among them. It is governed democratically, such as through a staff representative congress.
🏦 V. Financial Institutions
Organizations that provide financial services, such as banks, funds, securities firms, trusts, and insurance companies. They help facilitate capital flow by offering financial products.
Four subtypes:
🔹Fund
Contractual funds have no shareholding structure and distribute returns based on agreements. Corporate funds distribute shares based on capital contributions. Partnership funds follow an agreed structure between GPs and LPs.
🔹Trust
No traditional equity structure. Rights and duties are defined by trust contracts. Assets are entrusted by a settlor to a trustee, and beneficiaries receive returns.
🔹Private Financial Institution
Funded by individuals or entities; equity is distributed according to investment. It is operated for profit, with shareholders managing via shareholder meetings.
🔹Private Investment Vehicle / Family Office
Controlled by private individuals or families, with concentrated ownership. It’s primarily designed for asset management and wealth succession.
🏘️ VI. Other Business Types
Six subtypes:
🔹Non-Profit Organization
Not profit-driven, no equity structure. It is funded by donations or grants, and operates under its charter.
🔹Industry Association
Formed by members and no equity structure. It is run by member meetings or boards and aims to serve the industry.
🔹Mutual Company
Jointly owned and operated by members, who enjoy benefits based on their contribution and the company’s charter. This structure is primarily non-profit and focused on mutual benefit.
🔹Others
Equity structures not covered by the types above.