Key Elements of Business Activity
The word business literally means an entity or a group engaged in active commercial, industrial, or other commercial activities. Businesses can either be public or private entities. A public business is open to the public and may have stockholders meeting in common sessions, and are legally registered with the government. Private businesses, on the other hand, are not publicly registered but can be owned by an individual or by a corporation. Private businesses can be either sole proprietorships, partnership, or corporations.
The term business also encompasses other activities like advertising, sales, distribution, financing, research and development, management, and supervisory. All of these activities, whether they are conducted within the same premises or at different locations, are still part of the same term business. Many businesses conduct their day-to-day activities in the same way, performing the same tasks such as ordering supplies, handling transactions, reporting information, and handling payroll. Some businesses, however, conduct all these activities in separate buildings, or are self-employed, own small businesses that hire people to perform specific tasks. All these are forms of separate businesses.
The term business also encompasses corporations and LLCs. A corporation is a legal entity that has one or more registered corporations or LLCs. All publicly traded corporations and LLCs are registered with the state as a separate entity from the owner. In addition, most privately traded corporations and LLCs are registered individually.
All types of businesses engage in accounting. The accounting practices used by a company relate to the type of business activity conducted by that company. A bookkeeping service records financial transactions of the entity, including the sales and purchases of goods and services, and its income or profit.
All types of businesses must report their financial performance on a regularly scheduled basis to the public. Public reporting requirements differ for publicly traded corporations and limited liability companies. Reporting requirements also vary for all types of privately held for-profit businesses. All types of businesses must have some set of accounting principles governing the accounting practices used.
As you can see, there are many key elements associated with a business. Key elements include ownership, structure, operation, location, capital growth, marketing, finance, and accounting. These are just five of the many elements that make up a business. As you can see, there are many different ways to describe the nature of a business, but there are five key elements of business ownership and operation that apply to all businesses, regardless of type.