What is a business? A business is so defined by statute that it is an association of people or a group of people operating for the benefit of another. A business can be either for-profit or non-profitable organizations that carry out to meet a social or charitable purpose or further a social good. The definition of a business can also include any type of trade, occupation, manufacture or activity performed for the purpose of earning a profit. A company is generally considered to be a business if it carries on any or a combination of the above listed activities. The term can also be used to refer to any form of economic activity carried on by a corporation or any part of the workforce organized for the purpose of conducting business affairs.
To be able to conduct business and achieve its objectives, businesses have to maintain detailed financial records. This enables accountants to track financial transactions and make necessary reports to the Board of Directors. It is therefore important for businesses to hire qualified and skilled accountants who can handle the accounting aspects of their businesses. With advancements in technology, most businesses are now able to access these records and software online. This enables businesses to save both time and money in conducting their accounting and bookkeeping needs.
The term ‘corporation’ can either refer to individuals or to non-personal forms of organizations. Corporations can be formed by any number of individuals or by a government or other bodies. A large number of corporations in the United States are now registered with the US Department of Corporations and Trade. This allows them to report their profits and losses and file their annual reports with the agency. In case of any legal disputes, corporations usually appoint attorneys who work under their lawyers. However, a corporation cannot be taxed and this has led to a lot of confusion among business owners.
A partnership is another type of corporation that can be registered. Partnerships can be formed with one partner and any number of partners. A partnership can be taxed like a corporation and each partner is liable to his or her own tax. If no money is paid to one partner, the money is divided among the other partners equally. A limited liability partnership (LLC) allows business owners to divide their personal assets and liabilities between themselves and does not subject them to paying corporate taxes.
Limited liability partnerships operate similarly to corporations, with the exception that only the owner of a partnership is personally liable for the corporation’s debts and liabilities. This renders the partnership completely protected from bankruptcy proceedings. Limited Liability partnerships can be sued only by the owner or by the other owners, and shareholders can petition the courts for an alternative resolution to the partnership’s problems. A corporation may be sued by any member of the corporation. A sole proprietorship does not have shareholders; instead, the owner is the sole director of the company.
Another option for a small business entity is a separate legal entity. A separate legal entity has all of the advantages of a corporation without the drawbacks. Separate legal entities can protect against fraud and document theft, insulate against lawsuits, and provide protection against default in payment. A corporation may have access to more extensive forms of funding depending on its status as a publicly traded company.
General partnerships are formed between unrelated parties by a board of directors meeting in an effort to make profits. Partnerships share in the operating costs and losses of the partnership, but do not have debts and are not liable for debts of the other partner. For many small businesses, a general partnership offers the best balance between debt-secured operations and free enterprise. All losses and debts of the partner are assumed by the business. General partnerships also provide greater flexibility in the types of activities for which they are permitted to invest. They can invest in a wide range of ventures, including real estate, advertising, and the internet, and they receive dividends regularly based on the performance of their partners.
Limited liability partnerships (LLPs) are another popular type of business structure. Limited liability partnerships (or LLCs) are formed by two or more Limited Liability Corporations or LLCs. They are similar to general partnerships except that one partner is generally not liable for the actions of the other partner unless the partner has filed a lawsuit against the other partner. This form of business structure allows partners to control each other’s personal assets and spending, and limits personal liability.