Type Of Business Found In The Economy Commerce Essay

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Business legal structure : when beginning a business must know and decide what entity to establish the legal business structure it is how the business chooses it is basics to operate. The legal construction verify who shares the profits and who losses , how the tax will be paid , where legal responsibilities rests. It determine the nature world for business relationships with the business associate , investors , creditors and employees .

One of the key decisions you'll make when starting a business is which licit structure to utilize. Because it's such an important decision, you should get advice from a qualified independent business, financial or licit advisor.

The structure you choose will depend on the size and type of business, along with your personal circumstances and how much you want to grow the business.

Keep in mind that if you require to, you can change your business structure later on if you find that a new structure will meet your needs better.

The sole trader:

A form of business in which one person owns all the assets of the business, in contrast to a partnership or a corporation.

A person who does business for himself is engaged in the operation of a sole proprietorship. Anyone who does business without formally creating a business organization is a sole proprietor. Many diminutively minuscule businesses operate as sole proprietorships. Professionals, consultants, and other accommodation businesses that require minimum amounts of capital often operate this way.

A sole proprietorship is not a separate licit entity, like a partnership or a corporation. No licit formalities are compulsory to create a sole proprietorship, other than felicitous licensing to conduct business and registration of a business name if it differs from that of the sole proprietor. Because a sole proprietorship is not a separate licit entity, it is not itself a taxable entity. The sole proprietor must report income and expenses from the business on Schedule C of her or his personal federal income tax return.

A major concern for persons organizing a business enterprise is limiting the extent to which their personal assets, unrelated to the business itself, are subject to claims of business creditors. A sole proprietorship gives the least protection because the personal liability of the sole proprietor is generally unlimited. Both the business assets and the personal assets of the sole proprietor are subject to claims of the sole proprietorship's creditors. In integration, existing liabilities of the sole proprietor will not be extinguished upon the dissolution or sale of the sole proprietorship.

Unlike the managers of a corporation or a partnership, a sole proprietor has total flexibility in managing and controlling the business. The organizational expenses and level of formality in a sole proprietorship are minimal as compared with those of other business organizations. However, because a sole proprietorship is not a separate licit entity, it terminates when the sole proprietor becomes incapacitated, retires, or dies. As a result, a sole proprietorship lacks business continuity and does not have a perpetual existence as does a corporation.

For working capital, a sole proprietorship is generally limited to the individual funds of the sole proprietor, along with any loans from outsiders willing to provide extra capital. During her lifetime, a sole proprietor can sell or give away any asset because the business is not licitly separate from the sole proprietor. At the death of the sole proprietor, the business is conventionally dissolved. The proprietor's estate, however, can sell the assets or perpetuate the business.

The advantage of a sole trader :

Facile formation:

The formation of sole proprietorship business is very facile and simple. No licit formalities are involved for establishing the business excepting a license or authorization in certain cases. The entrepreneur with initiative and certain amount of capital can establish such form of business.

Direct motivation:

The entrepreneur owns all and risks all. The entire profit goes to his pocket. This motivates the proprietor to put his heart and soul in the business to earn more profit. Thus, the direct relationship between effort and reward motivates the entrepreneur to manage the business more efficiently and effectively.

Better control:

The entrepreneur takes all decisions affecting the business. He chalk out the orchestration and executes the same. His ocular perceivers are on everything and everyone. There is no scope for laxity. This results in better control of the business and ultimately leads to efficiency.

Promptness in decision-making:

When the decision is to be taken by one person, it is sure to be quick. Thus, the entrepreneur as sole proprietor can arrive at quick decisions concerning the business by which he can take the advantage of any better opportunities.


Each and every aspect of the business is looked after by the proprietor and the business secrets are known to him only. He has no licit obligation to publish his accounts. Thus, the maintenance of adequate secrecy leaves no scope to his competitors to be cognizant of the business secrets.

Flexibility in operations:

The sole proprietorship business is undertaken on a diminutively minuscule scale. If any vicissitude is required in business operations, it is facile and quick to bring the vicissitudes.

Scope for personal touch:

There is scope for personal relationship with the entrepreneur and customers in sole proprietorship business. Since the scale of operations is diminutively minuscule and the employees work under his direct supervision, the proprietor maintains a harmonious relationship with the employees. Similarly, the proprietor can know the tastes, likes and dislikes of the customers because of his personal rapport with the customers.

Inexpensive formation and management:

The cost of formation of a sole proprietorship is the minimum because no cost is involved in its formation excepting the license fee in certain cases. The management of the business is also inexpensive as no specialists are normally appointed in various functional areas of the business which is the integrated advantages.

Liberate from Regime control:

Sole proprietorship is the least regulated form of business. Regulated laws are virtually negligible in its formation, day-to-day operation and dissolution.

Facile dissolution:

Like that of formation, the dissolution of the sole proprietorship is also very facile. Since the proprietor is the supreme authority and no regulations are applicable for closure of the business he can dissolve his business any time he likes.

Socially desirable:

New and diminutively minuscule entrepreneurs can take up business on diminutively minuscule- scale basis. There will be no scope for concentration of wealth in few hands. Sole proprietorship perpetuates its operation in virtually each and every area of business activity and caters to the desideratum of the society. Further, it provides ample opportunities for large-scale self-employment for rural and less skilled personnel. Thus, it is socially desirable.

The disadvantage of a sole trader :

The sole proprietorship business is not liberate from criticism. It suffers from certain limitations and drawbacks, because of its very nature and scope of operations. These points may be duly taken care of while entrepreneur adopting this mode of business

Limited resources:

The financial resources of any diminutively minuscule entrepreneur as an individual is limited. He mainly finances from his own savings or borrows from financial institutions, friends and relatives as per his capacity. Thus, limited resource is the major drawback of this form of business.

Limited managerial capability:

Modern business requires updated managerial skills in each and every sphere of activity. We cannot hope a single individual to possess all the managerial aptitudes compulsory to carry on a business efficiently. The limited financial resources of the sole proprietorship is a hindrance to hire the accommodations of managers with expertise in different areas, thereby the magnification of the business.

Unlimited liability:

Since the liability of the sole proprietor is unlimited, the private properties of the proprietor is also at risk. When the business fails, the private properties of the owner are utilized to pay off the business debts. Thus, the entrepreneur must have to look this aspect carefully.

Uncertainty of continuity:

The continuity of the business is dubious because the business may come to a cessation due to the incapacity or death of the proprietor. Even if at all the business passes on to the successor of the proprietor, it is unlikely that they may posses the business acumen like that of the proprietor. The discontinuance of the business is a social loss.

Less scope for economies of large-scale:

The economies of large-scale operation is enjoyed only by a large-scale enterprise, which the sole proprietorship business normal lacks. Therefore, there is less scope for availing the economies of large-scale.

Difficult to maintain personal contact:

Even though there is scope for personal touch in sole proprietorship business, it is unlikely to transpire when the business is undertaken in different areas. It is not so facile on the component of the proprietor to have personal contact with customers and suppliers concurrently.

the partnership :

A business organization in which two or more individuals manage and operate the business. Both owners are equally and personally liable for the debts from the business.

Partnership doesn't always mean two people. There are many large partnerships who have thousands of partners.

The advantages of a partnership:

Capital - Due to the nature of the business, the partners will fund the business with start up capital. This means that the more partners there are, the more money they can put into the business, which will sanction better flexibility and more potential for magnification. It also means more potential profit, which will be equally shared between the partners.

Flexibility - A partnership is generally more facile to compose, manage and run. They are less strictly regulated than companies, in terms of the laws governing the formation and because the partners have the only verbally express in the way the business is run (without interference by shareholders) they are far more flexible in terms of management, as long as all the partners can concur.

Shared Responsibility - Partners can share the responsibility of the running of the business. This will sanction them to make the most of their abilities. Rather than splitting the management and taking an equal share of each business task, they might well split the work according to their skills. So if one partner is good with figures, they might deal with the book keeping and accounts, while the other partner might have a flare for sales and therefore be the main sales person for the business.

Decision Making - Partners share the decision making and can help each other out when they require to. More partners means more brains that can be picked for business conceptions and for the solving of problems that the business encounters.

The disadvantages of a partnership:

Discordances - One of the most conspicuous disadvantages of partnership is the danger of discordances between the partners. Conspicuously people are liable to have different conceptions on how the business should be run, who should be doing what and what the best fascinates of the business are. This can lead to discordances and disputes which might not only harm the business, but also the relationship of those involved. This is why it is always advisable to draft a deed of partnership during the formation period to ascertain that everyone is cognizant of what procedures will be in place in case of discordance and what will transpire if the partnership is dissolved.

Acquiescent - Because the partnership is jointly run, it is compulsory that all the partners concur with things that are being done. This means that in some circumstances there are less freedoms with regards to the management of the business. Especially compared to sole traders. However, there is still more flexibility than with limited companies where the directors must bow to the will of the members (shareholders).

Liability - Ordinary Partnerships are subject to unlimited liability, which means that each of the partners shares the liability and financial risks of the business. Which can be off putting for some people. This can be contravened by the formation of a limited liability partnership, which benefits from the advantages of limited liability granted to limited companies, while still capitalizing on the flexibility of the partnership model.

Taxation - One of the major disadvantages of partnership, taxation laws mean that partners must pay tax in the same way as sole traders, each submitting a Self Assessment tax return each year. They are also required to register as self employed with HM Revenue & Customs. The current laws mean that if the partnership (and the partners) bring in more than a certain level, then they are subject to greater levels of personal taxation than they would be in a limited company. This means that in most cases establishing a limited company would be more beneficial as the taxation laws are more propitious.

Profit Sharing - Partners share the profits equally. This can lead to erraticism where one or more partners aren't putting a fair share of effort into the running or management of the business, but still reaping the rewards.

The internal and external factors that affect an organization:

Internal Communication

The culture of your organization is built on internal communication; this includes interpersonal relationships, training materials, newsletters, philosophical statements and policies. Your employees are happier when they are courteous and respectful of one another. They want their achievements to be recognized. When you provide sufficient injective authorizations to your subordinates, you enable them to do their jobs effectively. When you help employees identify with your company's mission and goals, you are likelier to keep them long-term.


Structure is an internal factor that impacts your company's day-to-day operations. You might sort your company by departments and teams, or you might structure it so that employees work with outside contractors. The structure impacts the number of employees you hire, the levels of hierarchy, the extent of employee and department collaboration and the roles of your employees. If you choose a structure predicated on contractual work, for example, you will save money on employees but have less control over the cessation product.


The economy is an external factor that effects the success of your business. The ability of your clients to pay directly impacts your bottom line, regardless of whether you sell a product or accommodation. You can offer sales and promotions, and you can tout the value of your company's offerings, but during rough financial times your clients might prefer to allocate their resources elsewhere. Economics might be specific to your clients' industries, and it might be a global issue impacting supply and inductively authorize. If you make a toy and business at toy stores across the country declines, your sales will suffer. Diversifying your product line minimizes this challenge.

External Communications

The way your company interacts with customers and its public audience impacts your company's image. If you alienate your external audience, you risk losing your source of income. Ascertain tactful communication strategies to promote a positive impression. Effective advertisements speak to the intended audience. Customers expect to be treated with courtesy by you and your employees. Maintain a professional voice in your electronic mails, letters and other correspondence. Ascertain your website is welcoming and simple to navigate. Press relinquishes need contact information and newsworthy content.

The social responsibilities

Corporate Social Responsibility (CSR) is an organization's obligation to consider the intrigues of their customers, employees, shareholders, communities, and the ecology and to consider the social and environmental consequences of their business activities. By integrating CSR into core business processes and stakeholder management, organizations can achieve the ultimate goal of creating both social value and corporate value.

As of late, CSR has gained notoriety as businesses have responded to two major changes in the last 5-10 years: the incrimination of public concern over the environment and the free flow of information afforded by the cyber world.

In the last several years, movies like An Inconvenient Truth and events such as Live Aid and Earth Day have brought climate change and protection of the Earth's environment into the forefront of people's minds. As stakeholders in any organization's strategic plan, the public represents shareholders, customers, employees, suppliers- everyone. Whatever issues that the public visually perceives as important, organizations should take notice of. An organization visually perceived as deleterious to the environment is very liable to be visually perceived as socially irresponsible, and therefore risks the relationship with all of its stakeholders.

Power influence matrix:

A power influence matrix map provides us with a means to group stakeholders together so we can speculate managing them as groups rather than individuals. This is very important in a large program where they will be hundreds of even thousands of people involved in or intrigued with the program, so that you as the program manager, don't get bogged down with day-to-day stakeholder management during the execution of the program.

A Stakeholder Map has two axis. On the horizontal we have "Interest", representing the level of interest an individual has in the program. This will typically be a function of how the program will impact them or their organization, or how much input into the program they will have. On the vertical axis we have "Influence", representing the level of influence or power an individual has in shaping the program and its direction.

Safety and health legislation:

The main piece of legislation affecting the management of health and safety in educational establishments across all sectors is the Health and Safety at Work, etc Act 1974 (HSWA). This Act provides a framework for ascertaining the health and safety of all employees in any work activity. It also provides for the health and safety of anyone who may be affected by work activities in e.g. pupils/students and visitors to educational sites, including parents and contractors.

Employers and employees (as well as manufacturers, suppliers and the self-employed) must comply with the obligations set out in the Act, which are summarized as follows.

Consumer legislation:

consists of laws and organizations designed to ascertain the rights of consumers as well as fair trade competition and the free flow of veracious information in the marketplace. The laws are designed to obviate businesses that engage in fraud or specified unfair practices from gaining an advantage over competitors and may provide additional protection for the impuissant and those unable to take care of themselves. Consumer protection laws are a form of regime regulation which aim to protect the rights of consumers. For example, a regime may require businesses to disclose detailed information about products-particularly in areas where safety or public health is an issue, such as food. Consumer protection is linked to the conception of "consumer rights" (that consumers have various rights as consumers), and to the formation of consumer organizations, which help consumers make better choices in the marketplace and get help with consumer complaints.

Other organizations that promote consumer protection include regime organizations and self-regulating business organizations such as consumer protection agencies and organizations, the Federal Trade Commission, ombudsmen, Better Business Bureaus, etc.

A consumer is defined as someone who acquires goods or accommodations for direct use or ownership rather than for resale or use in production and manufacturing.[1]

Consumer fascinates can also be protected by promoting competition in the markets which directly and indirectly accommodate consumers, consistent with economic efficiency, but this topic is treated in competition law.

Consumer protection can also be asserted via non-regime organizations and individuals as consumer activism.

Fair trade :

"Fair Trade is a trading partnership, predicated on dialogue, transparency and respect, that seek greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers - especially in the South. Fair Trade Organizations, backed by consumers, are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade."

Fair Trade products are produced and traded in accordance with these principles - wherever possible varied by credible, independent assurance systems.