What Is a Business?
The term business refers to an organization or enterprising entity engaged in commercial, industrial, or professional activities. Businesses can be for-profit entities or they can be non-profit organizations that operate to fulfill a charitable mission or further a social cause. Businesses range in scale from sole proprietorships to international corporations and can range in size from small to large.1
The term business can also be used to define the efforts and activities of individuals to produce and sell goods and services for profit.2
KEY TAKEAWAYS
A business is defined as an organization or enterprising entity engaged in commercial, industrial, or professional activities.
Businesses can be for-profit entities or non-profit organizations.
Business types range from limited liability companies, sole proprietorships, corporations, and partnerships.
There are businesses that run as small operations in a single industry while others are large operations that spread across many industries around the world.
Apple and Walmart are two examples of well-known, successful businesses.
Business
Understanding a Business
The term business can take on two different meanings. The first refers to an entity that operates for commercial, industrial, or professional reasons. The entity generally begins with a concept (the idea) and a name. Extensive market research may be required to determine how feasible it is to turn the idea into a business.3
Businesses often require business plans before operations begin. A business plan is a formal document that outlines the company's goals and objectives. It also lists the strategies and ways it plans to achieve these goals and objectives to succeed. Business plans are almost always essential when you want to borrow capital in order to begin operations.3
Determining the legal structure of the business is another important factor to consider. Business owners may need to secure permits and licenses and follow registration requirements in order to begin legal operations.3 Corporations are considered to be juridical persons in many countries, meaning that the business can own property, take on debt, and be sued in court.
Most businesses operate with the purpose of generating a profit. But that isn't necessarily an essential requirement of running a business. Some businesses have a goal to advance a certain cause. As such, these entities are referred to as for-profit businesses. Organizations that aren't profit-based are referred to as not-for-profit or nonprofits. These entities may operate as:
Charities
Arts, culture, educational, and recreational enterprises
Political and advocacy groups
Social services organizations4
The second definition of business refers to all of the activities involved with the sale and purchase of goods and services. Business activity can take place anywhere, whether that's in a physical storefront, online, or even on a roadside. Anyone who conducts business activity to earn a living must report this income to the Internal Revenue Service (IRS).
A name is often one of the most valuable assets of a business, so it's important that business owners choose their name wisely.
Types of Businesses
Many businesses organize themselves around some sort of hierarchy or bureaucracy, where positions in a company have established roles and responsibilities. The most common structures include:
Sole proprietorships: As the name suggests, a sole proprietorship is owned and operated by a single natural person. There is no legal separation between the business and the owner, which means the tax and legal liabilities of the business fall on the owner.
Partnerships: A partnership is a business relationship between two or more people who join forces to conduct business. Each partner contributes resources and money to the business and shares in the profits and losses of the business. The shared profits and losses are recorded on each partner's tax return.
Corporations: A corporation is a business in which a group of people acts together as a single entity. Owners are commonly referred to as shareholders who exchange consideration for the corporation's common stock. Incorporating a business releases owners of the financial liability of business obligations. A corporation comes with unfavorable taxation rules for the owners of the business.
Limited liability companies (LLCs): This is a relatively new business structure and was first available in Wyoming in 1977 and other states in the 1990s. A limited liability company combines the pass-through taxation benefits of a partnership with the limited liability benefits of a corporation.
Several lines of theory are engaged with understanding business administration including organizational behavior, organization theory, and strategic management.
Business Sizes
Business sizes vary. Small owner-operated companies are called small businesses. They are normally run by one person or a small group of people. These companies include family restaurants, home-based companies, clothing, books and publishing companies, dog walking businesses, and people who run trades. Profits are generally low, but enough to sustain the operations, as long as the business owner(s) are able to run in the black.
Mid-sized businesses are classified as those that usually earn between $50 million and $1 billion in revenue. These companies are more established than small businesses, with an employee base that ranges between 100 to 999 people.5 Forbes listed Fair Isaac, the company behind FICO, as the top mid-sized employer in the United States in 2021. The company had more than 4,000 employees and earned $1.295 billion in revenue in 2020.67
Larger businesses, which commonly operate as corporations, are those that employ more than 1,000 people and generate more than $1 billion in revenue.8 They may issue corporate stock to finance operations. In this case, the company is publicly traded and has certain reporting and operating restrictions, unlike smaller businesses that can operate independently of regulators. Multinational conglomerates like General Electric and Walmart are examples of corporations.
Business Industries
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, ExxonMobil conducts its business by providing oil.
Examples of Businesses
Apple
Apple is well known around the world for its innovative products, including its personal computers, and range of smart devices, as well as its range of services, such as music and video streaming, and production services.
Founded in 1977 by Steve Jobs and Steve Wozniak, Apple became the first publicly traded company whose value hit $1 trillion.9 The company's stock trades under the ticker symbol AAPL on the Nasdaq. Intraday trading as of Sept. 17, 2021, ranged around $145, while the market capitalization for the company hit $2.42 trillion.
The company employs more than two million people, including 80,000 individuals who work as direct Apple employees. The remaining jobs include suppliers, manufacturers, and others who are supported through the Apple store.10 The company reported net sales of $274 billion in 2020, driven primarily by its product segment.11
Apple's key to success lies in its family of products and its ability to innovate. The company focuses on design and quality—two key elements that were a key part of Jobs' corporate vision. The products that Apple creates and markets can be used under the same operating system, which allows consumers to sync them together, thus lowering corporate costs. Apple's ability to create, develop, and market new products and services also put it ahead of its competition.
Walmart
Walmart is one of the world's largest retailers and operates as a multinational corporation. The company was founded in 1962 by Sam Walton in Arkansas.12 It has more than 10,500 locations in more than 24 different countries and employs over 2.3 million people.1312
The company went public in 1970 and trades on the New York Stock Exchange (NYSE) under the ticker symbol WMT. As of Sept. 17, 2021, Walmart stock traded around $145 per share and its market cap was $405.92 billion.
Walmart earned $559.2 billion in revenue for the full year of 2021. This figure was driven by online sales through its ecommerce segment and international sales, which were primarily recorded in Mexico and Canada.
Walmart's success can be attributed to several factors, including its brand name, pricing, diversification (especially with the addition of its online marketplace), efficient supply chain management, and its financial strength.14
How Do You Start a Business?
There are a number of steps you need to go through in order to start a business. This includes conducting market research, developing a business plan, seeking capital or other forms of funding, choosing a location and business structure, picking the right name, submitting registration paperwork, obtaining tax documents (employer and taxpayer IDs), and pulling permits and licenses. It's also a good idea to set up a bank account with a financial institution to facilitate your everyday banking needs.
How Do You Start an Online Business?
Starting an online business involves some of the same steps as a traditional business—with a few exceptions.
You still need to do your market research and develop a business plan before anything else. Once that's done, choose a name and structure for your business, then file any paperwork to register your organization.
Rather than finding a physical location, choose a platform and design your website. Before launching your business, you should find a way to build up your target market, whether that's through traditional marketing means or more creative ways like social media.
How Do You Come Up With a Business Name?
Your business name should fit the type of organization you plan to run and it should be catchy—something that people will gravitate toward and remember, not to mention associate with you as well as the products and services you plan to sell. Originality is key. And most importantly, it should be a name that isn't already in use by someone else. Go online and do a business name search to see if it's available or already registered.
How Do You Write a Business Plan?
Business plans are essential to run your business and can help you secure the funding you need to start your operations. You can choose between a traditional or a lean business plan.
A traditional business plan is very comprehensive with a lot of details. This includes a summary of the company and the ways it will succeed. It also includes information about your market, management, products and services, marketing, and sales projections.
Lean formats are shorter but still contain very useful information such as partnership details, outlines of the business activities and customer relationships, cost structures, and revenue streams.
You can find templates online or come up with your own business plan document.
How Do You Get a Business Loan?
Not everyone has the funds to start their own business, which is where loans come into play.
Decide what kind of loan you want. You can go to a traditional lender or one that operates online. Or you may want to consider a government-backed loan, such as those offered through the Small Business Administration.
Regardless of what option you choose, prospective lenders want to see details on paper, especially if and when you're just starting out. Make sure you have your business plan ready, including outlines of costs and revenue streams.
As a new business owner, ensure you have a good credit score (since your business isn't off the ground yet) and you may need to put down some collateral to secure the loan if you're approved.
The Bottom Line
Businesses are a very important part of the economy. They provide products and services that can be purchased by individuals and other companies. Businesses range in size from small to large and operate in many different industries. Business structures also vary from sole partnerships to major corporations that provide shareholder equity to their owners.
If you're looking to start your own business, make sure you do your research and develop a business plan. This allows you to raise the money you need to start your operations. If you keep it simple in the beginning, you may end up with an idea that can help you develop your business and reach the same heights as Apple and Walmart.
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Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services).[1][2][need quotation to verify][3][4] Simply put, it is "any activity or enterprise entered into for profit."[5]
Having a business name does not separate the business entity from the owner, which means that the owner of the business is responsible and liable for debts incurred by the business. If the business acquires debts, the creditors can go after the owner's personal possessions. A business structure does not allow for corporate tax rates. The proprietor is personally taxed on all income from the business.
The term is also often used colloquially (but not by lawyers or by public officials) to refer to a company. A company, on the other hand, is a separate legal entity and provides for limited liability, as well as corporate tax rates. A company structure is more complicated and expensive to set up, but offers more protection and benefits for the owner.
Contents
1 Forms
2 Classifications
3 Activities
3.1 Accounting
3.2 Finance
3.3 Manufacturing
3.4 Marketing
3.5 Research and development
3.6 Safety
3.7 Sales
4 Management
4.1 Restructuring state enterprises
5 Organization and regulation
5.1 Commercial law
5.2 Capital
5.3 Intellectual property
5.4 Trade union
6 See also
7 References
8 External links
Forms
Main article: List of business entities
This article is part of a series on
Corporate law
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By jurisdiction
General corporate forms
Corporate forms
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Doctrines
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Forms of business ownership vary by jurisdiction, but several common entities exist:
Sole proprietorship: A sole proprietorship, also known as a sole trader, is owned by one person and operates for their benefit. The owner operates the business alone and may hire employees. A sole proprietor has unlimited liability for all obligations incurred by the business, whether from operating costs or judgments against the business. All assets of the business belong to a sole proprietor, including, for example, a computer infrastructure, any inventory, manufacturing equipment, or retail fixtures, as well as any real property owned by the sole proprietor.
Partnership: A partnership is a business owned by two or more people. In most forms of partnerships, each partner has unlimited liability for the debts incurred by the business. The three most prevalent types of for-profit partnerships are general partnerships, limited partnerships, and limited liability partnerships.[6]
Corporation: The owners of a corporation have limited liability and the business has a separate legal personality from its owners. Corporations can be either government-owned or privately owned, and they can organize either for profit or as nonprofit organizations. A privately owned, for-profit corporation is owned by its shareholders, who elect a board of directors to direct the corporation and hire its managerial staff. A privately owned, for-profit corporation can be either privately held by a small group of individuals, or publicly held, with publicly traded shares listed on a stock exchange.
Cooperative: Often referred to as a "co-op", a cooperative is a limited-liability business that can organize as for-profit or not-for-profit. A cooperative differs from a corporation in that it has members, not shareholders, and they share decision-making authority. Cooperatives are typically classified as either consumer cooperatives or worker cooperatives. Cooperatives are fundamental to the ideology of economic democracy.
Limited liability companies (LLC), limited liability partnerships, and other specific types of business organization protect their owners or shareholders from business failure by doing business under a separate legal entity with certain legal protections. In contrast, unincorporated businesses or persons working on their own are usually not as protected.[7][8]
Franchises: A franchise is a system in which entrepreneurs purchase the rights to open and run a business from a larger corporation.[9] Franchising in the United States is widespread and is a major economic powerhouse. One out of twelve retail businesses in the United States are franchised and 8 million people are employed in a franchised business.[10]
A company limited by guarantee: Commonly used where companies are formed for non-commercial purposes, such as clubs or charities. The members guarantee the payment of certain (usually nominal) amounts if the company goes into insolvent liquidation, but otherwise, they have no economic rights in relation to the company. This type of company is common in England. A company limited by guarantee may be with or without having share capital.
A company limited by shares: The most common form of the company used for business ventures. Specifically, a limited company is a "company in which the liability of each shareholder is limited to the amount individually invested" with corporations being "the most common example of a limited company."[11] This type of company is common in England and many English-speaking countries. A company limited by shares may be a
publicly traded company or a
privately held company
A company limited by guarantee with a share capital: A hybrid entity, usually used where the company is formed for non-commercial purposes, but the activities of the company are partly funded by investors who expect a return. This type of company may no longer be formed in the UK, although provisions still exist in law for them to exist.[12]
A limited liability company: "A company—statutorily authorized in certain states—that is characterized by limited liability, management by members or managers, and limitations on ownership transfer", i.e., L.L.C.[11] LLC structure has been called "hybrid" in that it "combines the characteristics of a corporation and of a partnership or sole proprietorship". Like a corporation, it has limited liability for members of the company, and like a partnership, it has "flow-through taxation to the members" and must be "dissolved upon the death or bankruptcy of a member".[13]
An unlimited company with or without a share capital: A hybrid entity, a company where the liability of members or shareholders for the debts (if any) of the company are not limited. In this case, the doctrine of a veil of incorporation does not apply.
Less common types of companies are:
Companies formed by letters patent: Most corporations by letters patent are corporations sole and not companies as the term is commonly understood today.
Charter corporations: Before the passing of modern companies legislation, these were the only types of companies. Now they are relatively rare, except for very old companies that still survive (of which there are still many, particularly many British banks), or modern societies that fulfill a quasi-regulatory function (for example, the Bank of England is a corporation formed by a modern charter).
Statutory companies: Relatively rare today, certain companies have been formed by a private statute passed in the relevant jurisdiction.
Note that "Ltd after the company's name signifies limited company, and PLC (public limited company) indicates that its shares are widely held."[14]
In legal parlance, the owners of a company are normally referred to as the "members". In a company limited or unlimited by shares (formed or incorporated with a share capital), this will be the shareholders. In a company limited by guarantee, this will be the guarantors. Some offshore jurisdictions have created special forms of offshore company in a bid to attract business for their jurisdictions. Examples include "segregated portfolio companies" and restricted purpose companies.
There are, however, many, many sub-categories of types of company that can be formed in various jurisdictions in the world.
Companies are also sometimes distinguished into public companies and private companies for legal and regulatory purposes. Public companies are companies whose shares can be publicly traded, often (although not always) on a stock exchange which imposes listing requirements/Listing Rules as to the issued shares, the trading of shares and a future issue of shares to help bolster the reputation of the exchange or particular market of exchange. Private companies do not have publicly traded shares, and often contain restrictions on transfers of shares. In some jurisdictions, private companies have maximum numbers of shareholders.
A parent company is a company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors; the second company being deemed as a subsidiary of the parent company. The definition of a parent company differs by jurisdiction, with the definition normally being defined by way of laws dealing with companies in that jurisdiction.
Classifications
Main article: Industry classification
Agriculture, such as the domestication of fish, animals, and livestock, as well as lumber, oil and mining businesses that extract natural resources and raw materials, such as wood, petroleum, natural gas, ores, plants or minerals.
Service businesses offer intangible goods or services and typically charge for labor or other services provided to government, to consumers, or to other businesses. Interior decorators, beauticians, hair stylists, make-up artists, tanning salons, laundromats, dry cleaners, and pest controllers are service businesses.
Financial services businesses include banks, brokerage firms, credit unions, credit cards, insurance companies, asset and investment companies such as private-equity firms, private-equity funds, real estate investment trusts, sovereign wealth funds, pension funds, mutual funds, index funds, hedge funds, stock exchanges, and other companies that generate profits through investment and management of capital.
Transportation businesses such as railways, airlines, and shipping companies deliver goods and individuals to their destinations for a fee.
Utilities produce public services such as water, electricity, waste management or sewage treatment. These industries are usually operated under the charge of a public government.
Entertainment companies and mass media agencies generate profits primarily from the sale of intellectual property. They include film studios and production houses, mass media companies such as cable television networks, online digital media agencies, talent agencies, mobile media outlets, newspapers, book and magazine publishing houses.
Sports organizations are involved in producing, facilitating, promoting, or organizing any activity, experience, or business enterprise focused on sports. They make their profits by selling goods and services that are sports related.
Industrial manufacturers produce products, either from raw materials or from component parts, then export the finished products at a profit. They include tangible goods such as cars, buses, medical devices, glass, or aircraft.
Real estate businesses sell, invest, construct and develop properties, including land, residential homes, and other buildings.
Retailers, wholesalers, and distributors act as middlemen and get goods produced by manufacturers to the intended consumers; they make their profits by marking up their prices. Most stores and catalog companies are distributors or retailers.
Activities
Accounting
Main article: Accounting
Accounting is the measurement, processing, and communication of financial information about economic entities[15][16] such as businesses and corporations. The modern field was established by the Italian mathematician Luca Pacioli in 1494.[17] Accounting, which has been called the "language of business",[18] measures the results of an organization's economic activities and conveys this information to a variety of users, including investors, creditors, management, and regulators.[19] Practitioners of accounting are known as accountants. The terms "accounting" and "financial reporting" are often used as synonyms.
Finance
Further information: Financial management and Managerial finance
See also: Corporate finance and Strategic financial management
Finance is a field that deals with the study of money and investments. It includes the dynamics of assets and liabilities over time under conditions of different degrees of uncertainty and risk.[20] In the context of business and management, finance deals with the problems of ensuring that the firm can safely and profitably carry out its operational and financial objectives; i.e. that it: (1) has sufficient cash flow for ongoing and upcoming operational expenses, and (2) can service both maturing short-term debt repayments, and scheduled long-term debt payments. Finance also deals with the long term objective of maximizing the value of the business, while also balancing risk and profitability; this includes the interrelated questions of (1) capital investment, which businesses and projects to invest in; (2) capital structure, deciding on the mix of funding to be used; and (3) dividend policy, what to do with "excess" capital.
Manufacturing
Main article: Manufacturing
Manufacturing is the production of merchandise for use or sale using labour and machines, tools, chemical and biological processing, or formulation. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale.
Marketing
Main article: Marketing
Marketing is defined by the American Marketing Association as "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large."[21] The term developed from the original meaning which referred literally to going to a market to buy or sell goods or services. Marketing tactics include advertising as well as determining product pricing.
With the rise in technology, marketing is further divided into a class called digital marketing. It is marketing products and services using digital technologies.
Research and development
Main article: Research and development
Research and development refer to activities in connection with corporate or government innovation.[22] Research and development constitute the first stage of development of a potential new service or product.[23] Research and development are very difficult to manage since the defining feature of the research is that the researchers do not know in advance exactly how to accomplish the desired result.[24]
Safety
Main article: Safety
Injuries cost businesses billions of dollars annually.[25] Studies have shown how company acceptance and implementation of comprehensive safety and health management systems reduce incidents, insurance costs, and workers' compensation claims.[26] New technologies, like wearable safety devices[27] and available online safety training, continue to be developed to encourage employers to invest in protection beyond the "canary in the coal mine" and reduce the cost to businesses of protecting their employees.
Sales
Main article: Sales
Sales are activity related to selling or the number of goods or services sold in a given time period. Sales are often integrated with all lines of business and are key to a companies' success.[28]
Management
Main article: Management
See also: Outline of business management
The efficient and effective operation of a business, and study of this subject, is called management. The major branches of management are financial management, marketing management, human resource management, strategic management, production management, operations management, service management, and information technology management.[citation needed]
Owners may manage their businesses themselves, or employ managers to do so for them. Whether they are owners or employees, managers administer three primary components of the business' value: financial resources, capital (tangible resources), and human resources. These resources are administered in at least six functional areas: legal contracting, manufacturing or service production, marketing, accounting, financing, and human resources.[citation needed]
Restructuring state enterprises
In recent decades, states modeled some of their assets and enterprises after business enterprises. In 2003, for example, the People's Republic of China modeled 80% of its state-owned enterprises on a company-type management system.[29] Many state institutions and enterprises in China and Russia have transformed into joint-stock companies, with part of their shares being listed on public stock markets.
Business process management (BPM) is a holistic management approach focused on aligning all aspects of an organization with the wants and needs of clients. BPM attempts to improve processes continuously. It can, therefore, be described as a "process optimization process". It is argued that BPM enables organizations to be more efficient, effective and capable of change than a functionally focused, traditional hierarchical management approach.[who?]
Organization and regulation
See also: Theory of the firm
Time required to start a business in 2017[30]
Most legal jurisdictions specify the forms of ownership that a business can take, creating a body of commercial law for each type.
The major factors affecting how a business is organized are usually:
The size and scope of the business firm and its structure, management, and ownership, broadly analyzed in the theory of the firm. Generally, a smaller business is more flexible, while larger businesses, or those with wider ownership or more formal structures, will usually tend to be organized as corporations or (less often) partnerships. In addition, a business that wishes to raise money on a stock market or to be owned by a wide range of people will often be required to adopt a specific legal form to do so.
The sector and country. Private profit-making businesses are different from government-owned bodies. In some countries, certain businesses are legally obliged to be organized in certain ways.
Tax advantages. Different structures are treated differently in tax law and may have advantages for this reason.
Disclosure and compliance requirements. Different business structures may be required to make less or more information public (or report it to relevant authorities) and may be bound to comply with different rules and regulations.
Control and coordination requirements. In function of the risk and complexity of the tasks to organize, a business is organized through a set of formal and informal mechanisms.[31][32] In particular, contractual and relational governance can help mitigate opportunism as well as support communication and information sharing.[32]:
Many businesses are operated through a separate entity such as a corporation or a partnership (either formed with or without limited liability). Most legal jurisdictions allow people to organize such an entity by filing certain charter documents with the relevant Secretary of State or equivalent and complying with certain other ongoing obligations. The relationships and legal rights of shareholders, limited partners, or members are governed partly by the charter documents and partly by the law of the jurisdiction where the entity is organized. Generally speaking, shareholders in a corporation, limited partners in a limited partnership, and members in a limited liability company are shielded from personal liability for the debts and obligations of the entity, which is legally treated as a separate "person". This means that unless there is misconduct, the owner's own possessions are strongly protected in law if the business does not succeed.
Where two or more individuals own a business together but have failed to organize a more specialized form of vehicle, they will be treated as a general partnership. The terms of a partnership are partly governed by a partnership agreement if one is created, and partly by the law of the jurisdiction where the partnership is located. No paperwork or filing is necessary to create a partnership, and without an agreement, the relationships and legal rights of the partners will be entirely governed by the law of the jurisdiction where the partnership is located. A single person who owns and runs a business is commonly known as a sole proprietor, whether that person owns it directly or through a formally organized entity. Depending on the business needs, an adviser can decide what kind is proprietorship will be most suitable.
A few relevant factors to consider in deciding how to operate a business include:
General partners in a partnership (other than a limited liability partnership), plus anyone who personally owns and operates a business without creating a separate legal entity, are personally liable for the debts and obligations of the business.
Generally, corporations are required to pay tax just like "real" people. In some tax systems, this can give rise to so-called double taxation, because first the corporation pays tax on the profit, and then when the corporation distributes its profits to its owners, individuals have to include dividends in their income when they complete their personal tax returns, at which point a second layer of income tax is imposed.
In most countries, there are laws that treat small corporations differently from large ones. They may be exempt from certain legal filing requirements or labor laws, have simplified procedures in specialized areas, and have simplified, advantageous, or slightly different tax treatment.
"Going public" through a process known as an initial public offering (IPO) means that part of the business will be owned by members of the public. This requires the organization as a distinct entity, to disclose information to the public, and adhering to a tighter set of laws and procedures. Most public entities are corporations that have sold shares, but increasingly there are also public LLC's that sell units (sometimes also called shares), and other more exotic entities as well, such as, for example, real estate investment trusts in the US, and unit trusts in the UK. A general partnership cannot "go public".
Commercial law
Main article: Corporate law
Offices in the Los Angeles Downtown Financial District
A very detailed and well-established body of rules that evolved over a very long period of time applies to commercial transactions. The need to regulate trade and commerce and resolve business disputes helped shape the creation of law and courts. The Code of Hammurabi dates back to about 1772 BC for example and contains provisions that relate, among other matters, to shipping costs and dealings between merchants and brokers.[33] The word "corporation" derives from the Latin corpus, meaning body, and the Maurya Empire in Iron-Age India accorded legal rights to business entities.[34]
In many countries, it is difficult to compile all the laws that can affect a business into a single reference source. Laws can govern the treatment of labour and employee relations, worker protection and safety, discrimination on the basis of age, gender, disability, race, and in some jurisdictions, sexual orientation, and the minimum wage, as well as unions, worker compensation, and working hours and leave.
Some specialized businesses may also require licenses, either due to laws governing entry into certain trades, occupations or professions, that require special education or to raise revenue for local governments. Professions that require special licenses include law, medicine, piloting aircraft, selling liquor, radio broadcasting, selling investment securities, selling used cars, and roofing. Local jurisdictions may also require special licenses and taxes just to operate a business.
Some businesses are subject to ongoing special regulation, for example, public utilities, investment securities, banking, insurance, broadcasting, aviation, and health care providers. Environmental regulations are also very complex and can affect many businesses.
Capital
Mexican Stock Exchange in Paseo de la Reforma, Mexico City
When businesses need to raise money (called capital), they sometimes offer securities for sale.[35]
Capital may be raised through private means, by an initial public offering or IPO on a stock exchange,[36] or in other ways.[37]
Major stock exchanges include the Shanghai Stock Exchange, Singapore Exchange, Hong Kong Stock Exchange, New York Stock Exchange and NASDAQ (the USA), the London Stock Exchange (UK), the Tokyo Stock Exchange (Japan), and Bombay Stock Exchange (India). Most countries with capital markets have at least one.
Businesses that have gone public are subject to regulations concerning their internal governance, such as how executive officers' compensation is determined, and when and how information is disclosed to shareholders and to the public. In the United States, these regulations are primarily implemented and enforced by the United States Securities and Exchange Commission (SEC). Other western nations have comparable regulatory bodies. The regulations are implemented and enforced by the China Securities Regulation Commission (CSRC) in China. In Singapore, the regulatory authority is the Monetary Authority of Singapore (MAS), and in Hong Kong, it is the Securities and Futures Commission (SFC).
The proliferation and increasing complexity of the laws governing business have forced increasing specialization in corporate law. It is not unheard of for certain kinds of corporate transactions to require a team of five to ten attorneys due to sprawling regulation. Commercial law spans general corporate law, employment and labor law, health-care law, securities law, mergers and acquisitions, tax law, employee benefit plans, food and drug regulation, intellectual property law on copyrights, patents, trademarks, telecommunications law, and financing.
Other types of capital sourcing include crowdsourcing on the Internet, venture capital, bank loans, and debentures.
Intellectual property
Main article: Intellectual property
Businesses often have important "intellectual property" that needs protection from competitors for the company to stay profitable. This could require patents, copyrights, trademarks, or preservation of trade secrets.[38] Most businesses have names, logos, and similar branding techniques that could benefit from trademarking. Patents and copyrights in the United States are largely governed by federal law, while trade secrets and trademarking are mostly a matter of state law. Because of the nature of intellectual property, a business needs protection in every jurisdiction in which they are concerned about competitors. Many countries are signatories to international treaties concerning intellectual property, and thus companies registered in these countries are subject to national laws bound by these treaties. In order to protect trade secrets, companies may require employees to sign noncompete clauses which will impose limitations on an employee's interactions with stakeholders, and competitors.
Trade union
Main article: Trade union
A trade union (or labor union) is an organization of workers who have come together to achieve common goals such as protecting the integrity of its trade, improving safety standards, achieving higher pay and benefits such as health care and retirement, increasing the number of employees an employer assigns to complete the work, and better working conditions.[39] The trade union, through its leadership, bargains with the employer on behalf of union members (rank and file members) and negotiates labor contracts (collective bargaining) with employers.[40] The most common purpose of these associations or unions is "maintaining or improving the conditions of their employment".[41] This may include the negotiation of wages, work rules, complaint procedures, rules governing hiring, firing, and promotion of workers, benefits, workplace safety and policies.
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