The Advantage of Corporations Over Lending Organizations
A business is defined by dictionaries as a commercial entity or organization having a legal description of carrying out commercial, industrial, and/or professional activities. In common usage, however, the term business refers more to the process of earning a profit by engaging in business. Many enterprises are chartered for the purpose of earning a profit through certain forms of transactions. A corporation for example is an organized company recognized by state law that exercises sole authority over its assets, property, and liabilities, while providing public services for the benefit of the public.
Building a successful business culture is crucial to business success. It does not matter whether you are dealing with a traditional corporation or an internet-based business. What is important is that business leaders take charge and foster this kind of environment so that employees and applicants understand the dynamics of the organization and work accordingly. A business that has a strong business culture would help attract talented people who would be interested in becoming part of your organization. This kind of environment encourages individuals to think for themselves and contribute to the growth of the business. At the same time, the employees feel a sense of belonging and security that would lead them to perform better.
Another aspect of business organization that you should pay close attention to is the ownership structure. The ownership structure refers to the partnership, limited liability, owner-employee, and ownership by the corporation or LLC. Limited liability partnerships (LLPs) and proprietor-employees enjoy the advantages of being a team and have the freedom to divide the profits and losses among the partners. However, an LLC is at the disadvantage of having potential liabilities and debts that could lead to the winding up of the business. An owner-employee should always try to avoid his personal assets in order to protect the business.
A sole proprietorship is another type of business organization that can be beneficial or detrimental to your success. A sole proprietorship is formed when one person owns the entire business. He can be called the sole owner because he owns everything, including the company, but he is still liable for all the liabilities and debts of the company. He can only manage the business by hiring and firing staff, and may not have any control over the finances and accounting procedures. A sole proprietorship is at a disadvantage because it does not provide any kind of freedom.
Partnerships are another option for small businesses, though they are often viewed as a risky investment because of the uncertain future of the partnership. Partnerships usually consist of two or more individuals who form a limited liability company or LLC together. These businesses are at a disadvantage compared to corporations because they are not able to create their own profit and loss statement and are restricted in the number of partners they can have.
As discussed earlier, capitalism greatly encourages ownership and investment. Capital is given to entrepreneurs so that they can create jobs and make products that will sell. capitalism also teaches people to be self-employed, hire workers, invest in the stock market, and purchase real estate to build long-term wealth. A major part of capitalism is ownership and investment, and as a result, partnerships and limited liability companies would help people succeed in business.