Business

A business is a legally established company that provides good and services to consumers, other businesses, or governmental agencies.  A business is also referred to as an enterprise, firm, or company.  It is usually formed by individuals with private interests in order to build wealth and personal interest.   Most businesses are operated in capitalist economies where there are opportunities to build and expand the operations.  Business owners maintain the objective of financial return in exchange for work, goods, or services.  They accept the personal and financial risks of running a business in hopes of building independent wealth and opportunity.

The two most common ways to establish a business include for profit and non-profit.  Personal businesses are most often formed to earn income or make a profit.  They may be started by individuals or in cooperation with others who have similar interests and financial goals.  This for profit type of business is subject to federal and state legislation and tax liability.  Another type of business is a not-for- profit business.  These types of businesses are established generally to benefit a specific group or charity and not for the sole purpose of earning an income.  Non profit businesses are still subject to federal and state legislation, but operate under different tax liability.  Examples of non profit businesses include educational agencies, school booster clubs, and nationally recognized charities (American Red Cross, Ronald McDonald House, etc).

There are several ways to establish a business.  Sole proprietorship is a business that is owned by a single person.  The single owner may employ others to help run the business or may operate it on his own.  A sole proprietorship business owner must take on personal liability of the debts taken on by the business.  A business partnership has two or more people who operate together in order make a profit.  Partnerships generally operate with each individual partner maintaining personal liability of the debts taken on by the business.  The three types of business partnerships include limited partnerships, limited liability partnerships, and general partnerships.

Another type of business that can be established is a corporation. A corporation can be established either for profit or not for profit.  The members of a corporation have separate personal liability which can be limited or unlimited.  A corporation is generally owned by several shareholders and overseen by a board of directors.  The board of directors acts as the business managers in hiring of staff.  An example of a business corporation is a group of doctors who operate independently but form a corporation to maximize billing and insurance convenience for their individual practices.

A cooperative is a type of business that is often referred to as a “co-op”.  A cooperative can be organized for profit or not for profit.  It is different from a corporation in that it has members instead of shareholders.  The members of a cooperative share in the decision making authority.  Cooperatives are generally classified in two categories.  These categories include consumer cooperatives and workers cooperatives.