A business is defined by Wikipedia as a group of people or an organization having a legal status. In common usage, the word “business” refers to the collective efforts and actions of people for the purpose of making and selling goods and/or services for monetary profit. If we want to define it more precisely, business means the process of earning a profit by the production of useful material goods that can be used by other people. It also includes the activities of buying and selling between persons.
The term “commerce” can also be used to describe the division of society into two broad types: individualistic and collective. Individualistic businesses are those in which profits are made by exerting effort or skill on the part of the owners, whereas collective businesses are those in which the profits are made by the use of technology, organization, and a system of resources such as money, capital, and land. Most of the businesses that fall under the category of collective businesses are found in the service industry like retail sales, lending, merchandising, etc. Common types of businesses may also include partnerships in which partners directly or indirectly participate in the value creation process.
There are several different business types. A sole proprietorship is the most common type of business. Under this business model, there is only one owner – the sole proprietor. This type of business has limited liability and can be taxed at a lower rate. However, there are some disadvantages to a sole proprietorship including inability to give employees effective workplace protections such as paid sick leave, legal protection from liability for errors and omissions, and investment and growth opportunities.
Another business type is a partnership. In partnership business types, there are usually two or more partners who share in the profits produced by the company. Common types of partnerships include general partnerships, limited partners, and common law partnerships. Partnerships are very common and often use this as a means to protect valued partners from creditors, litigation, and other losses.
A corporation is another common type of business. A corporation is different from a partnership because it elects a Board of Directors and establishes a written operating agreement. Unlike partnerships, a corporation must have a majority of shareholders and cannot exist for less than two years. Tax treatment is very different for corporations than for sole proprietors and partnerships. Unlike a corporation, a business can be dissolved when it is no longer profitable.
A last main article is intellectual property. Intellectual property is anything that a person owns that cannot be bought, borrowed, or reproduced by anyone else. This includes ideas, information, trademarks, trade names, etc. Intellectual property rights are especially important for small businesses to protect their products, services, and innovations. They are often used to protect the business from competitors and lawsuits, especially in the electronic arena.