What is business?
It is an activity through the means of which, each and every individual is able to earn a living for themselves. The system through which business functions is that goods are manufactured and sold. It may also be services that fulfill the needs of the people. The key thought is that there will be some initial investment that will be known as the capital. Channels of marketing will be put to use so that the target buyers can be lured and others may also get to know about the coming up ventures, offers, deals and other items. On selling these, profits are generated with are used to pay the salaries of the existing workers, pay off the creditors and then finally some amount is put into the firm as reinvestment.
Forms of business.
- Sole proprietorship: This is a form of business in which only one person is the actual owner of the company. This means that all the legal documents of the company are in his name and all the profits that are made are under his name. there are benefits as well as disadvantages of being a sole proprietor. The sole owner does everything in the company. This means that he is also an overall supervisor to see if things are working fine. There is decision making in the hands of one and he has unlimited liability. In fact, all the assets of the company also belong to him.
- Partnership: This is one of the most common forms of business that you can think of as well as observe around you. In a partnership, two or more people come together to form an alliance and run a business or a firm. They are bound by a legal contract that is a written document. It must clearly specify all important details and terms and conditions of work such as the limit of liability, role in decision making, role in running the firm and also claim to the profit. The three types of partnerships are general partnerships, limited partnerships and limited liability partnerships.
- Corporation: a corporation can either be owned privately or by the government. Thus, it is a very dynamic and flexible form of business that is prevalent at the moment. The owners of the corporation have limited liability and the legal identity of the firm is separate than that of its owners. In fact, some corporations are also established with the motive of being a non-profit organization. In case a corporation is privately owned, then the shareholders have the power to elect a board of directors so that they look after the management and the activities that take place at the firm.
- Cooperative: Also known as a “co-op”, there is a very strong difference that exists between a corporation and a cooperative. The key point is that unlike a corporation, a cooperative has members and not shareholders. These members have equal authority when it comes to decision making and functioning.