A business is defined in the Merriam Webster’s Collegiate Dictionary Tenth Addition as a human enterprise organized for profit, usually for the benefit of the members or proprietors. A business can be either for-profit or nonprofit organizations that conduct business to meet a social purpose or further a social ideal. In the United States, a business can include any enterprise relating to trade, commerce, manufacturing, selling, or distribution. Business may also mean the process of earning a profit by the business itself or the provision of goods, services, and information to promote the business. The most common types of businesses are retailing, leasing, investment, banking, and administration.
In addition to profit-making businesses, there are other types of businesses that can be considered as either for-profit or nonprofit in nature. Examples of this include partnerships, joint ventures, proprietor/asset, capitalized partnerships, and ownership by the corporation or by an individual or group of individuals. Partnerships are enterprises in which one party is primarily responsible for the results while other parties are involved in generating employment, sales, and profits. Examples of partnership relationships include employment partners, management partnerships, ownership by an individual or group of people, and capitalized partnerships.
A business can also be comprised of one or more partnerships. In this case, the partnership is a separate legal entity from the corporation or LLC in which it operates. However, both entities are considered one and the same meaning that they are considered a partnership when the operations of the partnership are contributing to the success of the corporation or LLC. In addition to partnership relationships, there are two basic forms of ownership in a business: direct and indirect. Ownership refers to who makes the decisions for the business, while control refers to the ability to make decisions or instructions for the business. Direct owners are those who own the business, while indirect owners are those who are related to the business as a buyer or seller.
Every business must have a written document that presents the nature and goals of the organization. This is known as the Memorandum and Articles of Association of a corporation or LLC. Similarly, all businesses require a qualified accountant or attorney to draft a proper Business Plan. This document explains in detail the nature of the organization, its products or services, the financial capabilities and risks, and strategies to achieve its goals.
A business may be operated by one or more people. These include the owners, shareholders, managers, and employees. The most common types of employees are the owner or proprietor, who receives profits directly from the business, employees, who perform work under the supervision of the owners or proprietors, and workers, who are employed by both the owner or proprietor and another company and receive salaries from that company. Common types of profit sharing include profit-sharing, performance shares, bonus pay, and stock options. There are some small businesses that operate on a self-directed basis, which means that profits and losses are shared by the partners directly.
Small business usually has two or more owners. One owns and operates the business and the other is an owner or partner. In a partnership, there is only one owner. Some examples of partnership are limited liability partnership (LLP), a public limited partnership (PNP) and corporation. In addition, there are several common types of debts that can affect a business’s profits, such as short-term debts and capital advances. For example, if a manufacturing firm owes money to a manufacturer of rubber shoes, the profits of that firm will be negatively affected by the loss of income in the manufacturing firm.