A business is generally defined as a corporation or organized body corporate, public or personal, which performs commercial, agricultural, or other economic activities aimed at generating profit. Businesses may be either for-profit or non-profit entities that carry out activities to meet a social objective or further an educational purpose. Companies can also be composed of members or stockholders who own interests directly or indirectly. A small business usually sells products or services to customers at a retail price and pays them from its profits.
Small businesses can either be home-based enterprises or those that deliver goods or services to customers at some other location. A home-based business normally delivers goods or services bought by a customer from a dealer. On the other hand, a for-profit business distributes goods or services bought by a person or an entity through a distributor. The main objective of both enterprises is to generate profit. However, small businesses have less risk and are often easy to expand.
The company description of a business, also known as the company profile, is the first step in creating a business plan. This consists of the summary of the nature and size of the enterprise, aims and objectives, business development strategies, estimated cost and revenue, and financing arrangements. It is important to provide accurate information to reap benefits and avoid missing opportunities. Company descriptions, if prepared by a qualified accountant, should cover all important matters, including market research, legal structure, management policies, control, ownership, investment, and succession. It is recommended to update company description every five years to keep track of changes in financial reporting standards.
A business organization, on the other hand, is the set of individual decisions, aims, and responsibilities related to carrying out various business activities. It usually includes directors, officers, managers, and employees who make daily business decisions. A business organization should record the day-to-day activities of the company. Business activities include sales and purchases, production, marketing, and financial operations. It also includes the interaction of the owners with customers, suppliers, and other activities necessary for the growth of the enterprise.
Some businesses are sole proprietors and others are corporations. Examples include partnerships, limited liability companies, and LLCs (limited liability companies). Partnerships are partnerships that allow the members to divide the profits between themselves without affecting the equity holders or partners. Limited liability companies are businesses that protect the assets of the owners while giving them limited liability, giving them the ability to get loans from the bank while paying taxes on their income. LLCs are corporations that operate as businesses but have their personal finances under the business umbrella.
The different types of businesses are governed by different laws. Corporations are governed under state law and have general requirements, while partnerships are governed by special laws for limited liability partnerships, limited partnership, general partnership, and corporations. Partnerships are governed by general agreements and corporate documents such as operating agreements, by-laws, and security agreements. Limited liability companies are governed under the laws of the country in which they are domiciled. There are many differences among these three types of businesses.
Many businesses have a special legal structure that they use when they start out. Under the business formation model, most new businesses have the names of their owners on all of the records. This provides an easy way for tax identification and allows investors to track records of their contributions to the company.
Other ways to create a lean startup is to work closely with experienced mentors who are experienced in launching new ventures. They can provide the technical know how and training to make the starting of a new venture go smoothly. These mentors are in a great position to help you achieve your goals. Lean startups are becoming quite popular because of their potential for succeeding even in difficult times. In the current economy, it may be wise to consider this model of business for your company.