What is Business?

INTRODUCTION TO BUSINESS

What is Business?

Business is a whole gamut of activities involved in producing or procuring goods and services for sale to earn profit. Business can be done by an individual or a group of individuals. Business is derived from the word” busyness,” which means engaging in an activity.

Characteristics of a business

Let us understand the characteristics of business. Some of them are:

Production or trading: Businesses happen either because they manufacture goods and then sell them for a profit or because they procure goods and services and sell them for a profit. There are several activities, such as manufacturing, warehousing, and transportation.

Economic activity: A business should qualify to be an economic activity. An economic activity should generate monetary returns.

Sale and exchange: The sale and exchange require a marketplace that brings a buyer and seller together. The product or offering should be brought to the marketplace by the seller and exchanged the product or offering for a sale price.

Profit earning: The primary objective of the business is to make and maximize profits. The business objective should be to maximize profits and reduce costs.

Legal activity: The nature of business activity should follow all the legal and statutory regulations.

Regularity of business: A business should have continued transactions of selling and buying for profit. A single transaction cannot be considered a business.

Risk factor: A business will have a risk factor. If the company aspires to gain more, it should take more risks. The market conditions and demand-supply factors govern the rewards.

Uncertainty of Returns: Businesses run in uncertain conditions. The profits must be determined. The returns are always uncertain.

Finances: A business needs finances to run in the form of fixed and working capital. To meet financial needs, the business owner has to get financing in various forms from various sources.

Types of Business

Sole proprietorship: In this type of business, the entire company is run by a single investor and business owner who handles the operations. The sole proprietorship entirely owns the profits and losses. He takes the whole risk in the business. He is solely responsible for any tax and legal obligations.

Partnership: In this business structure, two or more persons run the business jointly. They contribute resources and money and share the profit and loss to the extent of their contribution, which they have agreed upon.

Limited liability partnership (LLP): A LLP (limited liability partnership) is a hybrid structure with a combination of characteristics of a corporation and a partnership firm.

Corporation: In a corporation, a group of people or entities come together to do business to earn profit. The business owners are termed as stakeholders.

S Corporation: S corporations are small businesses with only a maximum of a hundred shareholders. S corporation has some tax exemption privileges. The stakeholders can issue only one type of stock.

C Corporation: The Corporation is the most suitable form of starting a business for startups, especially Tech Startups. They have to issue annual reports and also pay corporate taxes. It appoints the board of directors also.

Scope of business

The scope of business is vast and covers several activities which can be broadly classified into industry and commerce.

Industry

Industry products fall into consumer, capital, and intermediary goods. The industries include extracting industries (mining, farming, fishing, etc.), genetic industries (breeding of plants and animals), manufacturing industries, processing industries, construction industries, etc.

Commerce

Commerce has two aspects: trade and service business.

Trade: Trade can be domestic or international. Domestic trade is trading internally within a country. Global trade is training across the boundaries and boundaries of a given country.

Service business: Service business enables the trade to happen. For example, banking and financial services, warehousing, transportation, insurance, communication, advertising and marketing, etc.

Conclusion:

Business is an integral part of any economy with a healthy gross domestic product. Enroll in our course to gain in-depth knowledge and understand more about business.