Definition of Business, What is Small Business, Ideas for Businesses
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If you are asking yourself many questions on what exactly is Definition of Business,
Small Business Definition or What is Small Business, you may find
some answers and Ideas for Business on this page. And if you need or will
need
business accounting software
to start a new business, you have found it
and is offered right here on our website.
In economics, a Definition of Business is a legally-recognized organizational
entity existing within an economically free country designed to sell goods and/or
services to consumers, usually in an effort to generate profit.
In predominantly capitalist economies, where most businesses are privately
owned, businesses are typically formed to earn profit and grow the personal
wealth of their owners.
People want to start a business for a variety of reasons. This may include trying
to find an alternative to paid employment or a desire to earn more money or be more
independent. So What is Small Business?
You may also brush up and read on Accountancy Theories...
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The owners and operators of a business have as one of their main objectives the receipt or generation of a financial return in exchange for their work and their acceptance of risk. Notable exceptions to this rule include cooperative businesses and government institutions. This model of business functioning is contrasted with socialistic systems, which involve either government, public, or worker ownership of most sizable businesses.
The etymology of "business" relates to the state of being busy either as an individual or society, doing commercially viable and profitable work. The term "business" has at least three usages, depending on the scope — the singular usage (above) to mean a particular company or corporation, the generalized usage to refer to a particular market sector, such as "the record business," or the broadest meaning to include all activity by the community of suppliers of goods and services.
However, the exact Definition of Business, like much else in the philosophy of business, is a matter of debate. Business Studies, the study of the management of individuals organizing to maintain collective productivity toward accomplishing particular creative and productive goals (usually to generate profit), is taught as an academic subject in many schools.
When prospective customers had a business or had it on their mind,
traditionally,
Softhard Solutions
was able to provide them with business accounting software
(often also hardware) to run their business the way they do the business.
There were, at many times, Softhard Solutions' customers who did not quite
have a clear picture of the business they wanted to do or undertake.
This page and following pages are dedicated to such people. Its all tips and '
need
to know
' about a Definition of Business and know what to do before
a start.
What ever your destiny may turn out to be, you are heading the right direction - indipendence - right? Well read on to get some clues...
Basic Forms of Ownership.
Although forms of business ownership vary by country and local government, there
are several generic forms of business ownership:
Sole Proprietorship:
A sole proprietorship is a business owned by one person. The owner may operate on
their own or may employ others. The owner of the business has total and unlimited
personal liability of the debts incurred by the business.
Partnership:
A partnership is a form of business in which two or more people operate for the
common goal of making profit. Each partner has total and unlimited personal liability
of the debts incurred by the partnership. There are three typical classifications
of partnerships: general partnerships, limited partnerships, and limited liability
partnerships.
Corporation:
A business corporation is a for-profit, limited liability entity that has a separate
legal personality from its members. A corporation is owned by multiple shareholders
and is overseen by a board of directors, which hires the business's managerial staff.
Cooperative:
Often referred to as a "Co-Op business" or "Co-Op", a cooperative is a for-profit,
limited liability entity that differs from a corporation in that it has members,
as opposed to shareholders, who share decision-making authority. Cooperatives are
typically classified as either consumer cooperatives or worker cooperatives. Cooperatives
are fundamental to the ideology of economic democracy.
Classifications
Wall Street, Manhattan is the location of the New York Stock Exchange and is often
used as a symbol for the world of business as is Commercial Street, Bangalore, India.
There are many types of businesses, and, as a result, businesses can be classified
in many ways. One of the most common focuses on the primary profit-generating activities
of a business:
Manufacturers produce products, from raw materials or component parts, which they
then sell at a profit. Companies that make physical goods, such as cars or pipes,
are considered manufacturers. Service businesses offer intangible goods or services
and typically generate a profit by charging for labor or other services provided
to government, other businesses or consumers.
Organizations ranging from house decorators to consulting firms to restaurants and
even to entertainers are types of service businesses. Retailers and Distributors
act as middle-men in getting goods produced by manufacturers to the intended consumer,
generating a profit as a result of providing sales or distribution services. Most
consumer-oriented stores and catalog companies are distributors or retailers.
See also: Franchising Agriculture and mining businesses are concerned with the production
of raw material, such as plants or minerals. Financial businesses include banks
and other companies that generate profit through investment and management of capital.
Information businesses generate profits primarily from the resale of intellectual
property and include movie studios, publishers and packaged software companies.
Utilities produce public services, such as heat, electricity, or sewage treatment,
and are usually government chartered.
Real estate businesses generate profit from the selling, renting, and development
of properties, homes, and buildings. Transportation businesses deliver goods and
individuals from location to location, generating a profit on the transportation
costs There are many other divisions and subdivisions of businesses. The authoritative
list of business types for North America (although it is widely used around the
world) is generally considered to be the North American Industry Classification
System, or NAICS. The equivalent European Union list is the NACE.
Organization
Most businesses must accomplish similar functions regardless of size, legal structure
or industry. These functions are often organized into departments. Common departments
include (but are not limited to):
Accounting
typically responsible for financial reporting, financial controls and the raising
of the capital necessary to run the business.
Human Resources
typically responsible for hiring, firing, payroll, benefits, etc.
Marketing and Sales
responsible for selling the business' goods or services to the customer and for
managing the relationships with the customer.
Marketing
typically responsible for promoting interest in, and generating demand for, the
business' products or services, and positioning them within the market.
Sales
finding likely purchasers and obtaining their agreement (known as a contract) to
buy the business' products or services.
Operations
makes the product or delivers the service.
Production
produces the raw materials into the delivered goods, if they require processing.
Customer service
supports customers who need help with the goods or services.
Procurement
responsible for acquiring the goods and services necessary for the business.
Sometimes organized as:
Strategic sourcing
determines the business' needs and plans for acquiring the necessary raw materials
and services for the business.
Purchasing
processes the purchase orders and related transactions.
Research and Development
tests to create new products and to determine their viability (e.g. pilot plants).
Information Technology
manages the business' computer and data assets.
Communications/Public Relations
responsible for communicating to the outside world.
Administration
provides administrative support to the other departments (such as typing, filing,
etc.).
Internal Audit
an independent control function typically accountable to the Board of Directors
for reporting on the proper functioning of the other departments.
Management
is sometimes listed as a "department" but typically refers to the top level of leadership
within the business regardless of their functional role.
Management
The study of the efficient and effective operation of a business is called management. The main branches of management are financial management, marketing management, human resource management, strategic management, production management, service management, information technology management, and business intelligence.
Government Regulation
Most legal and governmental jurisdictions specify the forms of ownership that a business can take, creating a body of commercial law for each type.
Organizing a Vehicle
The major factors affecting how a business is organized are usually: The size and
scope of the business, and its anticipated management and ownership. Generally a
smaller business is more flexible, while larger businesses, or those with wider
ownership or more formal structures, will usually tend to be organized as partnerships
or (more commonly) corporations.
In addition a business which wishes to raise money on a stock market or to be owned
by a wide range of people will often be required to adopt a specific legal form
to do so. The sector and country. Private profit making businesses are different
from government owned bodies. In some countries, certain businesses are legally
obliged to be organized certain ways. Limited liability. Corporations, limited liability
partnerships, and other specific types of business organizations protect their owners
from business failure by doing business under a separate legal entity with certain
legal protections.
In contrast, unincorporated businesses or persons working on their own are usually
not so protected. Tax advantages. Different structures are treated differently in
tax law, and may have advantages for this reason. Disclosure and compliance requirements.
Different business structures may be required to make more or less information public
(or reported to relevant authorities), and may be bound to comply with different
rules and regulations. Many businesses are operated through a separate entity such
as a corporation, limited partnership or limited liability company.
Most legal jurisdictions allow people to organize such an entity by filing certain
charter documents with the relevant Secretary of State or equivalent and complying
with certain other ongoing obligations. The relationships and legal rights of shareholders,
limited partners, or members are governed partly by the charter documents and partly
by the law of the jurisdiction where the entity is organized.
Generally speaking, shareholders in a corporation, limited partners in a limited
partnership, and members in a limited liability company are shielded from personal
liability for the debts and obligations of the entity, which is legally treated
as a separate "person." This means that unless there is misconduct, the owner's
own possessions are strongly protected in law, if the business does not succeed.
Where two or more individuals own a business together but have failed to organize
a more specialized form of vehicle, they will be treated as a general partnership.
The terms of a partnership are partly governed by a partnership agreement if one
is created, and partly by the law of the jurisdiction where the partnership is located.
No paperwork or filing is necessary to create a partnership, and without an agreement,
the relationships and legal rights of the partners will be entirely governed by
the law of the jurisdiction where the partnership is located.
A single person who owns and runs a business is commonly known as a sole proprietor,
whether he or she owns it directly or through a formally organized entity. A few
relevant factors to consider in deciding how to operate a business include:
General partners in a partnership (other than a limited liability partnership),
plus anyone who personally owns and operates a business without creating a separate
legal entity, are personally liable for the debts and obligations of the business.
Generally, corporations are required to pay tax just like "real" people.
In some tax systems, this can give rise to so-called double taxation, because first
the corporation pays tax on the profit, and then when the corporation distributes
its profits to its owners, individuals have to include dividends in their income
when they complete their personal tax returns, at which point a second layer of
income tax is imposed.
In most countries, there are laws which treat small corporations differently than
large ones. They may be exempt from certain legal filing requirements or labor laws,
have simplified procedures in specialized areas, and have simplified, advantageous,
or slightly different tax treatment. In order to "go public" (sometimes called IPO)
-- which basically means to allow a part of the business to be owned by a wider
range of investors or the public in general -- you must organize a separate entity,
which is usually required to comply with a tighter set of laws and procedures.
Most public entities are corporations that have sold shares, but increasingly there
are also public LLCs that sell units (sometimes also called shares), and other more
exotic entities as well (for example, REITs in the USA, Unit Trusts in the UK).
However, you cannot take a general partnership "public".
Commercial Law
Most commercial transactions are governed by a very detailed and well-established
body of rules that have evolved over a very long period of time, it being the case
that governing trade and commerce was a strong driving force in the creation of
law and courts in Western civilization. As for other laws that regulate or impact
businesses, in many countries it is all but impossible to chronicle them all in
a single reference source.
There are laws governing treatment of labour and generally relations with employees,
safety and protection issues (OSHA or Health and Safety), anti-discrimination laws
(age, gender, disabilities, race, and in some jurisdictions, sexual orientation),
minimum wage laws, union laws, workers compensation laws, and annual vacation or
working hours time.
In some specialized businesses, there may also be licenses required, either due
to special laws that govern entry into certain trades, occupations or professions,
which may require special education, or by local governments who just want your
money. Professions that require special licenses run the gamut from law and medicine
to flying airplanes to selling liquor to radio broadcasting to selling investment
securities to selling used cars to roofing. Local jurisdictions may also require
special licenses and taxes just to operate a business without regard to the type
of business involved.
Some businesses are subject to ongoing special regulation. These industries include,
for example, public utilities, investment securities, banking, insurance, broadcasting,
aviation, and health care providers. Environmental regulations are also very complex
and can impact many kinds of businesses in unexpected ways.
Capital
When businesses need to raise money (called 'capital'), more laws come into play.
A highly complex set of laws and regulations govern the offer and sale of investment
securities (the means of raising money) in most Western countries. These regulations
can require disclosure of a lot of specific financial and other information about
the business and give buyers certain remedies.
Because "securities" is a very broad term, most investment transactions will be
potentially subject to these laws, unless a special exemption is available. Capital
may be raised through private means, by public offer (IPO) on a stock exchange,
or in many other ways. Major stock exchanges include the New York Stock Exchange
and Nasdaq (USA), the London Stock Exchange (UK), the Tokyo Stock Exchange (Japan),
and so on.
Most countries with capital markets have at least one. Business that have gone "public"
are subject to extremely detailed and complicated regulation about their internal
governance (such as how executive officers' compensation is determined) and when
and how information is disclosed to the public and their shareholders. In the United
States, these regulations are primarily implemented and enforced by the United States
Securities and Exchange Commission (SEC).
Other Western nations have comparable regulatory bodies. As noted at the beginning,
it is impossible to enumerate all of the types of laws and regulations that impact
on business today. In fact, these laws have become so numerous and complex, that
no business lawyer can learn them all, forcing increasing specialization among corporate
attorneys. It is not unheard of for teams of 5 to 10 attorneys to be required to
handle certain kinds of corporate transactions, due to the sprawling nature of modern
regulation.
Commercial law spans general corporate law, employment and labor law, health care
law, securities law, M&A law (who specialize in acquisitions), tax law, ERISA
law (ERISA in the United States governs employee benefit plans), food and drug regulatory
law, intellectual property law (specializing in copyrights, patents, trademarks
and such), telecommunications law, and more.
In Thailand, for example, it is necessary to register a particular amount of capital
for each employee, and pay a fee to the government for the amount of capital registered.
There is no legal requirement to prove that this capital actually exists, the only
requirement is to pay the fee. This is a typical example of a corrupt government
using its power to create laws in order to steal money. Overall, processes like
this are detrimental to the development and GDP of a country, but often exist in
"feudal" developing countries.
Intellectual Property
Businesses often have important "intellectual property" that needs protection from
competitors in order for the company to stay profitable. This could require patents
or copyrights or preservation of trade secrets. Most businesses have names, logos
and similar branding techniques that could benefit from trademarking. Patents and
copyrights in the United States and Australia are largely governed by federal law,
while trade secrets and trademarking are mostly a matter of state law.
Because of the nature of intellectual property, a business needs protection in every
jurisdiction in which they are concerned about competitors. Many countries are signatories
to international treaties concerning intellectual property, and thus companies registered
in these countries are subject to national laws bound by these treaties.
Exit Plans
Businesses can be bought and sold. Business owners often refer to their plan of disposing of the business as an "exit plan." Common exit plans include IPOs, MBOs and mergers with other businesses.
Business Tips
Some tips on how to avoid business failure:
-
Don't underestimate the capital you need to start up the business.
-
Understand and keep control of your finances - income earned is not the same as
cash in hand.
-
More volume does not automatically mean more profit - you need to get your pricing
right.
- Make sure you have good software for your business, software that provides you with a good reporting picture of all aspects of your business operations.
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