What is a ‘Business’
A business is an organization or enterprising entity engaged in commercial, industrial or professional activities. A company transactsbusiness activities through the production of a good, offering of a service or retailing of already manufactured products. A business can be a for-profit entity or a nonprofit organization that operates to fulfill a charitable mission
BREAKING DOWN ‘Business’
A business most often forms after the development of a business plan. This plan outlines the strategic intentions and logistics in making those intentions occur. A business name must be registered with the state, and this name is often referred to as the “doing business as” or DBA name. A business can operate with its own tax identification number and tax liabilities, so one of the pivotal steps in forming a business is determining the legal structure of the business and associated taxation implications. Different businesses require various permits and licenses to operate legally. Finally, a business has legal obligations in regard to treatment of employees and the conditions in which the employees work. These legal obligations of a business include properly assessing payroll taxes on employees as well as the business itself.
The most basic business structure is a sole proprietorship. The owner of the business is the sole individual who takes ownership of assets and debt obligations. Alternatively, multiple individuals with shared duties can operate a business, and this business structure is a partnership. A business may operate as a corporation. Incorporating a business releases owners of financial liability of business obligations; however, a corporation has unfavorable taxation rules for the owners of the business. For this reason, a fourth business structure, called a limited liability company, is available, which combines the benefits of a partnership and corporation.
Businesses include everything from a small owner-operated company, such as a family restaurant, to a multinational conglomerate, such as General Electric. Larger businesses may issue corporate stock to finance operations. In this case, the company is publicly traded and has reporting and operating restrictions. Alternatively, smaller businesses may operate more independently of regulators.
A company may describe its business by communicating the industry in which it operates. For example, the real estate business, advertising business or mattress production business are industries in which a business can exist. Because the term “business” can be interchanged with day-to-day operations as well as the overall formation of a company, the term is often used to indicate transactions regarding an underlying product or service. For example, Exxon Mobil transacts business in providing oil.
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