An enterprising or organization entity engaged in industrial, commercial, or professional activities is called business. Businesses operate to fulfill a charitable mission or further a social cause that it can be for-profit entities or nonprofit organizations.
The Business Structure
There are four legal structures of businesses that vary from country to country and not all of the possible forms of business ownership are available in all countries. The most common legal structure of businesses is:
1. Sole proprietorships - is the most prevalent one. It is a business owned and operated by a single natural person with no legal separation between the business and the owner, therefore, legal liabilities and tax of the business are that of the owner.
2. Partnerships - is a business relationship between two or more people who join to conduct business. Each partner contributes money and resources to the business and shares in the profits and losses of the business. The losses and shared profits are recorded on each partner's tax return.
3. Corporations - is a business in which there are the group of people act together as a single entity, owners of a corporation, most commonly, are shareholders who exchange consideration for the corporation's common stock. A corporation has unfavorable taxation rules for the owners of the business while incorporating a business means releasing owner a financial liability of business obligations.
4. Limited Liability Companies - this structure combines the pass-through taxation benefits of a partnership with the limited-liability benefits of a corporation.
Characteristics of A business
There are three key characteristics that must be met to have a business.
1. Businesses must be the result of individuals working together in an organized way
2. A business must satisfy a societal need
3. Lastly, businesses must seek to make a profit.
Businesses are made up of individuals working together in an organized way in order to be successful and are organized around the resources needed to be successful as well and also the type of business that is being operated. Other businesses are organized in a way that it requires constant cooperation and communication with other employees while others may not require as much contact with other employees but may instead rely on automated workflows that they must decide the best way to be organized based on their individual goals. A business must satisfy a need for society. An example of this societal need is a grocery store who satisfy the need to be able to purchase food for ourselves and our families. In order to strategically plan for success, businesses must carefully consider what need they are meeting for society.
Features of Business
1. Exchange of services and goods - whether it’s for money or money's worth, all business activities are directly or indirectly anxious with the exchange of goods or services.
2. Dealing with many transactions - businessman regularly deals with a number of transactions and not just one or two transactions and the exchange of goods and services is a regular feature in business.
3. Profit is the main objective - a profit is a reward for the service of a businessman and is carried on with the intention of earning a profit.
4. Business skill for economic success - everyone can have a business but not everyone can run a business. One needs to have good business skills and qualities to be a good businessman.
5. The risks and the uncertainties - business is subject to risks and uncertainties. Some of this risk can be insured like loss due to fire and thief. Loss due to change in demand or fall in price is some of the uncertainties that cannot be insured and must be borne by the businessman.
6. The buyer and the seller - the buyer and the seller two parties in every business transactions.
7. Connected with production - very business activity may be connected with productions of goods and services that are called industrial activity whether it’s primary or secondary.
8. Marketing and the distribution of goods - commercial activity is a kind of business that is connected with marketing or distribution of goods.
9. Deals in goods and services - when it comes to business, there have to be dealings with goods and services. And this good may be divided into two categories:
● Consumer goods - that are used by the final consumer for consumption that is called consumer goods like soaps, shampoo, T.V., etc.
● Production goods - used by productions for further productions is called producer goods like equipment, machinery, etc. services are untouchable but it can be exchanged for value such as insurance services, warehousing, etc.
10. Satisfying human wants - satisfying human wants is also the desire of businessman through the conduct of business. Businessmen try to promote consumer’s satisfaction by producing and supplying various commodities.
11. The social obligation - with today’s businessman, they are more service-oriented rather than profit-oriented because a modern business is a service oriented and is conscious of their social responsibility. With today’s businessman, they are more service-oriented rather than profit-oriented.
Profit Isn’t Just All About Money
While people tend to think of profit in terms of money, it is more likely of encompassing the term. Profit includes symbols of money, in business definition, such as credits, services, and items that are exchanged instead of money, just like barter. It can be made on paper and even in whole other currency systems like Bitcoins and it can be based on a promise as it occurs if there are two or more parties engage in a contract. In English contract law, there must be an exchange of consideration between the parties in order to create a binding contract which the law will recognize and enforce.
The Business Sizes and The Industries
The business sizes range from small owner-operated companies like family restaurants to multifunctional corporation such as General Electric. It issues corporate stock to finance operations. The larger business is publicly traded and has operating and reporting restrictions. By communicating the industry in which a company may describe its business. The term business can be interchanged with day-to-day operations as well as the overall formation of a company, an example of this is the real estate business, or advertising business is industries in which a business can exist. The term is often used to indicate transactions regarding an underlying product or service.