The term business is coined from the word busy which means doing work or things. Simply put, a business is an association that sells goods and services for gain. To start with not all business gain or are booming enough but their only objective is to generate profits.
Business requires a lot of patience, high-skill of management, mental strength, teamwork, and effectiveness to work. As it is not always safe, the individual should be competent enough to bear his loss and be mentally ready to manage his fall. But if properly prepared it can give a much-increased rate of success.
The main legal forms a business can take are:
- Sole proprietorship– The owner and the business is of one identity. Consider a man making and then selling an egg omelet at the side of the road no legality is required to be filled in this case.
- Partnership- In this more than one person or a group combines to form the business. The only advantage it provides is the manpower which works together and yields profit.
- Corporation- In this the shareholder is asked to own some part of the business with keeping restricted liability protection. The shareholders can smoothly trade stocks without impacting the company’s processes.
A business entity is an entity that holds firm activities as per the country’s individual rules and regulations. The state in which the entity is set up is extremely essential as distinct entities are subjected to different rules and they hold different components.
Types of business entities:
- Private company– The type of personally maintained company in which shareholder accountability is restricted to the quantity of share capital paid by them.
- Public limited company– In this, the liability is restricted to extent of share capital produced by them.
- Limited partnership– It comprises limited partner and general partner.
- Unlimited partnership– It comprises associates with infinite liability.
- Statutory corporation– When the state forms the entity it is termed the statutory corporation.
- Holding company– It refers to those who hold a share of another company. The business activities are not carried out directly by the companies.
- Subsidiary company– It is owned or maintained by any other company.
- Sole proprietorship– In this type, no other legal entity is needed.
- Limited liability companies– It is a mixed entity bearing the characteristics of both partnership and corporation.
Business plays a vital role in improving the economy of the country. It also helps in providing employment by increasing job opportunities thus producing a higher standard of living.