Business culture plays a vital role in the extraction, production and distribution of various necessary goods in individual, social and national life. It also contributes to economic development and wealth creation.
There are many types of business. Some have hybrid practices, such as combining manufacturing and merchandising functions in the same company.
Definition
The word business refers to the activities of organisations that trade goods or services for a profit. Whether this profit is returned to owners as dividends or invested in achieving stated goals or improving infrastructure, businesses operate in order to make a profit.
Not all businesses seek profits, however. An individual who offers creative skills on a freelance basis, for example, may be considered to be running a business even without an office or shop front. There are three main legal forms of business: sole proprietorship, partnership and corporation.
The term business also has multiple synonyms including commerce, industry and traffic. The word can also be used to describe the vertical industry in which an organisation operates e.g. a music business. Business is not synonymous with employment, however, as the latter refers to an individual engaging in a labouring activity for wages or salary.
Types
The type of business a company chooses to form determines how it is structured and taxed. The most common types are sole proprietorships, partnerships, limited liability companies and corporations. Each has its own pros and cons.
A sole proprietorship is the simplest business structure, with one owner responsible for all profits and debts of the business. This business structure provides the least amount of legal protection for its owner, who can be sued by creditors or even arrested if she doesn’t pay taxes or is found guilty of a crime.
Corporations offer more protection for its owners, as shareholders are not liable for the company’s debts or legal disputes. However, forming a corporation can be complicated and requires that you file articles of incorporation with the state.
Structure
The business structure is one of the most important decisions that business owners need to make. It affects everything from the way the company is run to how much paperwork it has to file. The structure also determines how much personal liability the owners take on.
A few things to consider before choosing a structure include the type or nature of the business, the complexity involved, the investment required, the liabilities assumed and tax incentives. Once the structure is decided, aspiring business people must plan their future activities accordingly.
Generally, smaller businesses start off as sole proprietorships, which allow them to be managed by one person. As they grow, they may become partnerships or corporations. Corporations have to jump through more legal hoops than other entities and need professional guidance.
Operations
Business operations are the daily activities that help a business to sustain itself, improve its value and derive income. They are usually handled by the employees of a business. They may also be referred to as the production process.
These processes are crucial for a business to function, but they are often complex and difficult to understand. Often, these processes include many different aspects of the business, such as human resources, information technology and accounting.
In addition, the types of business operations vary depending on the type of business, industry and size. For example, a retail business will need point of sale terminals and e-commerce software to operate efficiently. However, all businesses have the same basic needs for operational efficiency. These include hiring candidates, developing products and providing customer support.
