The Importance of Business Entity

By on 3-28-2017 in Business, Entrepreneurialism, Internet and Businesses Online, Internet Marketing, Management

When you just started your own small business, maybe you involve your personal assets as an equipment of the business. Also, when your business generates profits, maybe you withdraw the profits and take them into your own pocket. Maybe you do not create a new, independent bank account for your business; maybe it is still merged with your own bank account.

What is Business Entity?

This practice is okay for a business that is just started, but as your business grows, you need to think about the concept of business entity. A business entity is a concept that instructed you to think that your business is a sole entity different from your own financial belongings. It is a concept that separates a business from its owners so that everything involved in the business (such as cash inflows, debts, and any other kinds of business operation) will never become your personal responsibilities unless you are willing to do so.

This business entity concept is vital for your business because it defines what your business is under the regulations. There are several types of business entities that are present all over the world, but they are all varied greatly depending on the jurisdiction and the regulations that are ruling in certain countries or governments. Some of the types of business entities are corporations, partnerships, or nonprofit organizations.

Going Concern

Another important aspect of the business entity concept is that a business entity is expected to be going concern. This means that every time you start a new business, you expect that it will run forever and ever, without having to worry that it will end sometime in the future. This concept of going concern is important to make sure that you run your book schedule right. It is also important to separate your own financial management with your business.

Two Other Types of Businesses

By on 3-28-2017 in Business, Entrepreneurialism, Internet and Businesses Online, Internet Marketing, Management

When it comes to business and enterprises, there are several types of businesses exist in the real world. These types of businesses varied greatly depending on the dynamics and the kinds of work or occupation involved in the business. They are also depending on how many owners are involved in the business and how easily the interest of the owner and the worker in the business is separable.The only type of business that we are all common with is a company or a corporation. Now, here are two other common types of businesses that exist throughout the entire world.

Sole Proprietary Business

Basically, sole proprietary business is the kind of business owned by just one person. This is just the simplest form of business because it involves just one person as both the worker and the owner of the business. Sometimes sole proprietary business involves more than one person but they are related like married couple and brothers. Of course, sole propri
etary business is not a legal entity because there is an inseparable interest of the person as an owner and the person as a worker.

Partnership

Different from sole proprietary business, a partnership is a business that involves two or more persons (not related like in marriage or brotherhood) which any of these persons (or also called partners) contribute skills or assets to the business. Profits, losses, debts, and management of the business are all separated equally to the amount of contribution from each partner. Another variation of the partnership is limited liability partnership, in which some partners are regarded as an active partner, who actively manage and work for the business, while some other partners are regarded as a passive partner, who is not involved in the active operation of the business but give a certain amount of contribution to the business.