Business

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Image:View of Wall Street.jpg In economics, business refers to the social science of managing people to organize and maintain collective productivity toward accomplishing particular creative and productive goals. The etymology of "business" literally refers to the state of being busy, in the context of the individual as well as the community or society.

The term "business" has three usages, depending on the scope —the general usage (above), the singular usage to refer to a particular company or corporation, and the generalized usage to refer to a particular market sector, such as "the record business" or "the computer business."

The singular "business" is an atomic legally-recognized entity within an economically free society, wherein individuals organize based on expertise and skills to bring about social and technological advancement. With some exceptions, (such as cooperatives, non-profits and (typically) government institutions), businesses are formed under the motivation of earning profit and growing personal wealth of its members. In other words, the owners and operators of a business have as one of their main objectives the receipt or generation of a financial return in exchange for their work — that is, the expense of time, energy, and money.

1 Types of businesses
2 Organization
3 Business and government
- 3.1 Organizing a Vehicle
- 3.2 Commercial Law and Other Regulation
4 Business and management
5 See also
6 Other uses
7 External links

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Types of businesses

Image:Commercial st.jpg There are many types of businesses, and, as a result, businesses can be classified in many ways. One of the most common focuses on the primary profit-generating activities of a business, for example:

Manufacturers produce products, from raw materials or component parts, which they then sell at a profit. Companies that make physical goods, such as cars or pipes, are considered manufacturers.
Service businesses offer intangible goods or services and typically generate a profit by charging for labor or other services provided to other businesses or consumers. Organizations ranging from house painters to consulting firms to restaurants and even to entertainers are types of service businesses.
Retailers and Distributors act as middle-men in getting goods produced by manufacturers to the intended consumer, generating a profit as a result of providing sales or distribution services. Most consumer-oriented stores and catalogue companies are distributors or retailers.
Agriculture and mining businesses are concerned with the production of raw material, such as plants or minerals.
Financial businesses include banks and other companies that generate profit through investment and management of capital.
Information businesses generate profits primarily from the resale of intellectual property and include movie studios, publishers and packaged software companies.
Utilities produce public services, such as heat, electricity, or sewage treatment, and are usually government chartered.
Real estate businesses generate profit from the selling, renting, and development of properties, homes, and buildings.
Transportation businesses deliver goods and individuals from location to location, generating a profit on the transportation costs.

There are many other divisions and subdivisions of businesses. The authoritative list of business types for North America (although it is widely used around the world) is generally considered to be the NAICS, or North American Industry Classification System. The equivalent European Union list is the NACE.

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Organization

Most businesses must accomplish similar functions regardless of size, legal structure or industry. These functions are often organized into departments. Common departments include (but are not limited to):

Finance and control

typically responsible for bookkeeping, financial reporting, financial controls and the raising of the capital necessary to run the business. See also Accounting

Human Resources

typically responsible for hiring, firing, payroll, benefits, etc.

Marketing and sales

responsible for selling the business' goods or services to the customer and for managing the relationships with the customer

Marketing: typically responsible for generating demand for the business' products or services
Sales: finding and processing the sale of the business' products or services

Production/service

makes the product or delivers the service

Procurement

responsible for acquiring the goods and services necessary for the business. Sometimes organized as:

Strategic sourcing: determines the business' needs and plans for acquiring the necessary raw materials and services for the business
Purchasing: processes the purchase orders and related transactions

Information Technology: manages the business' computer and data assets
Communications/Public Relations: responsible for communicating to the outside world
Administration: provides administrative support to the other departments (such as typing, filing, etc)
Internal Audit: an independent control function typically accountable to the Board of Directors for reporting on the proper functioning of the other departments

Management is sometimes listed as a "department" but typically refers to the top level of leadership within the business regardless of their functional role.

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Business and government

Image:London.bankofengland.arp.jpg Most legal jurisdictions specify the forms that a business can take, and a body of commercial law has developed for each type. Some common types include partnerships, corporations (also called limited liability companies), and sole proprietorships.

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Organizing a Vehicle

Many businesses are operated through a separate entity such a corporation, limited partnership or limited liability company. Most legal jurisdictions allow you 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, as the case may be, are governed partly by the charter documents and partly by the law of the jurisdiction where the entity is organized.

Where two or more individuals own a business together but have failed to organize a specific vehicle such as a corporation, limited partnership or limited liability company, they will be treated as a general partnership. The terms of a partnership will be partly governed by a partnership agreement if one is created, and partly by the law of the jurisdiction where the partnership is located. However, 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.

The term sole proprietorship is used widely to refer to any business which is owned by a single person, whether he or she owns it directly or through a formally organized entity.

A few relevant factors to consider in deciding how to operate a business include:

1. 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."

2. General partners in a limited or general 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.

3. Generally, corporations are required to pay income tax just like "real" people. This creates the so-called double-taxation, because first the corporation pays tax on the profit. For the shareholders to receive any of the remaining profits, the corporation must declare a dividend on the stock. 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.

4. Corporations that have a small number of shareholders and meet other conditions may qualify to be treated by the IRS as so-called "S Corporations," because they are described in subchapter S of the Internal Revenue Code. All other corporations pay taxes under subchapter C, and thus are "C Corporations." S Corporations enjoy so-called "pass-through" tax treatment which avoids the second layer of tax. There are ongoing paperwork requirements, though.

5. LLCs and limited partners in a limited partnership enjoy "pass-through" tax treatment and are not subjected to a second layer of tax.

6. In order to "go public" -- which basically means to sell small pieces of the equity in your business to a large number of investors -- you must organize a separate entity. Most public entities are corporations that have sold shares, but increasingly there are also public LLCs that sell units (or they can call them shares, too), and other more exotic entities as well, like REITs. However, you cannot take a general partnership "public." (Who would buy a general partnership interest? Remember, general partners are personally liable.)

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Commercial Law and Other Regulation

Most commercial transactions are governed by a very detailed and well-established body of rules that have evolved over a very long period of time, it being the case that governing trade and commerce was a strong driving force in the creation of law and courts in Western civilization. In the United States, the Uniform Commercial Code has been adopted in some form or another in all 50 states, with some differences, and helps provide some consistency in the treatment of sales of goods, banking transactions, commercial paper, shipping, trading in investment securities, creation and perfection of security interests (i.e., collateral for loans) and other basic commercial activities. The ubiquitous "AS IS" is the subject of an important part of the Uniform Commercial Code.

As for other laws that regulate or impact businesses, in the United States at least it is impossible to chronicle them all. There are laws (state and federal) that govern treatment of labor and generally relations with employees, everything from OSHA (office safety), anti-discrimination laws (age, gender, disabilities, race, and in some jurisdictions, sexual orientation), minimum wage laws, union laws, workers compensation laws, and laws that govern family leave time.

There are often many kind of licenses required, either due to special laws that govern entry into certain trades, occupations or professions, which may require special education, or by local governments who just want your money. Professions that require special licenses run the gamut from law and medicine to flying airplanes to selling liquor to radio broadcasting to selling investment securites to selling used cars to roofing. Local jurisdictions also like to require special licenses and taxes just to do business there, without regard to what type of business you do.

Some businesses are subject to ongoing special regulation. These industries include, for example, public utilities, investment securities, banking, insurance, broadcasting, aviation, and health care providers. Environmental regulations are also very heavy and complicated and can impact many kinds of businesses in ways they never imagined.

Businesses often have important "intellectual property" that needs protection from competitors in order to stay profitable. This could require patents or copyrights or preservation of trade secrets. Most business 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 properly, a business needs protection in every jurisdiction in which they are concerned about competitors.

When business need to raise capital, yet more laws come into play. A highly complex set of Federal and State regulations govern the offer and sale of investment securities in the United States, as in most Western countries. These regulations can require disclosure of a lot of specific financial and other information about the business and give buyers certain remedies. Because "securities" is a very broad term, most investment transactions will be potentially subject to these laws, unless a special exemption is available.

Business that have gone "public" (i.e., reached a certain size -- the most prominent of which trade on public markets like the New York Stock Exchange or Nasdaq) are subject to extremely detailed and complicated regulation about their internal governance (such as how executive officers' compensation is determined) and when and how information is disclosed to the public and their shareholders. In the United States, these regulations are primarily implemented and enforced by the United States Securites and Exchange Commission. Other Western nations have comparable regulatory bodies.

As noted at the beginning, it is impossible to enumerate all of the types of laws and regulations that impact on business in the United States today. In fact, these laws have become so numerous and complex, that no business lawyer can learn them all, forcing increasing specialization among corporate attorneys. It is not unheard of for teams of 5 to 10 attorneys to be required to handle certain kinds of fairly straightforward corporate transactions, due to the sprawling nature of modern regulation. There are general corporate lawyers, employment and labor lawyers, healthcare lawyers, securities lawyers, M&A lawyers (who specialize in acquisitions), tax lawyers, ERISA lawyers (ERISA governs employee benefit plans), food and drug regulatory lawyers, intellectual property lawyers (who specialize in copyrights, patents, trademarks and such), telecommunications lawyers, and more.

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Business and management

The study of the efficient and effective operation of a business is called management. The main branches of management are financial management, marketing management, human resource management, strategic management, production management, service management, information technology management, and business intelligence.

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Other uses

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Defecation -- "Business", used alone or in a phrase such as "taking care of business" is often a polite euphemism for defecation.
Productivity -- "Business" can mean productive behavior in general. See, e.g. "taking care of business".
The Business is a punk rock band.
Sexual intercourse, especially in reference to someone one feels is worthy to receive their sexual attention, such as "she could get the business"
Confidential information. E.g., "it's none of your business".
Clientele. E.g. "the lawyer has a large book of business".

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