Are you interested in entrepreneurial activity? Then it is important to understand the basic concepts to better navigate the business world. Understanding the fundamental aspects of entrepreneurship will always come in handy, whether you dream of running your own startup or just want to expand your knowledge of economics. In this article, we have compiled everything you need to know about an enterprise.
What is an enterprise?
An enterprise is an independent business entity engaged in the production of goods or provision of services for profit. It must be registered and formalised in accordance with the applicable laws. The main goal of the enterprise is to create value that meets the needs of consumers and generates income.
For example, a car manufacturing plant is an enterprise that transforms raw materials into a finished product. A clothing store is an enterprise that buys goods in bulk and sells them to end consumers. A café that prepares and sells food is also a catering business. Each of them has its own specifics, but all of them have a common goal - to make a profit by satisfying customers' needs.
What are the types of businesses?
Businesses are classified according to several criteria to better define their features and functions. Let's look at the main ones.
By size.
- Microenterprises. The smallest companies with up to 10 employees and assets and revenues not exceeding a certain limit. These are usually small companies or start-ups.
- Small enterprises. The number of employees ranges from 10 to 50, and the amount of assets and income is higher than that of micro-enterprises, but still quite limited. These can be family businesses or small trading companies.
- Medium-sized enterprises. These companies employ between 50 and 250 people. Net income is 8-40 million euros annually.
- Large enterprises. They have more than 250 employees, assets of 20 million euros or more, and revenues of more than 40 million euros. These are industrial giants, international corporations, or large retail chains.
By type of activity.
Businesses are also classified by type of activity. There are 17 main sectors of the economy, each of which has its own subgroups and a corresponding code. For example, the manufacturing sector covers the production of cars, clothing, food, etc. This classification is particularly important when preparing tax and financial reports, as it allows you to clearly define the type of activity of the company and comply with regulatory requirements.
By form of ownership.
- A company with full liability (TPL). Participants are fully liable for the company's obligations with their property. This form is not often used because of the high risks for the participants.
- Limited liability company (LLC). Members are liable for obligations only to the extent of their contributions. This is one of the most popular forms for small and medium-sized businesses.
- Additional Liability Company (ALC). It combines the characteristics of an LLC and an ALC. Participants are additionally liable in case of a shortage of company assets.
- Joint Stock Company (JSC). The capital is divided into shares that can be bought and sold. Shareholders are liable only to the extent of the value of their shares.
In addition, it is possible to create various public associations, cooperatives and other forms of organisations that have their own specific features and requirements.
Enterprise and entrepreneurship: what is the difference?
These two concepts are often confused, although they have different meanings. As we have already defined, an enterprise is an organisation that produces goods or provides services for profit. It is a specific structure with defined resources, employees, and processes.
Entrepreneurship, on the other hand, is the process of creating and managing a company. It is an activity that involves finding ideas, planning, risk-taking and strategic decisions to start and grow a business. Entrepreneurship covers all aspects: from concept and organisation to implementation and management.
Who is an entrepreneur?
An entrepreneur is a person who organises and manages a business and takes financial risk in order to make a profit. He or she finds ideas, develops business plans, attracts investors, and manages the business to achieve success.
An individual entrepreneur (IE) is one of the most popular forms of ownership in Ukraine. It is the best choice for small businesses, as it allows them to operate with simplified administrative procedures and tax liabilities.
How to succeed in business?
In this post, we have compiled the main definitions so that you can form a general idea of entrepreneurship. If you want to become a qualified specialist or start your own business, you will need a quality education. We invite you to study at the OPTIMA Distance College, where you can acquire the necessary knowledge and skills for successful professional development!
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