The word business can refer to any activity that’s meant to create products or provide services—as in ‘doing business’ It can also mean the entity that’s creating products or providing services, in other words ‘a business’.
A business can be structured in several ways, including
- private
- public
- commercial
- non-commercial
- not-for-profit
When the goal is to earn money, we typically refer call it a company. When you register a business, you have to decide which type you want to go for. Then you’ll get a business number.
Private business
The goal of a private business is to make a profit by selling products and services. Besides these financial gains, private businesses might want to generate value to their community as well as generate employment opportunities.
The most common type is called a limited liability company. In a limited liability company, there can be one or more owners, and the ownership is determined by shares.
This term can also be used about anything from organisations and clubs to sole proprietorships. A sole proprietorship is when an individual sells goods and services and is responsible for any money that business may owe. Many sole proprietors call themselves contractors, freelancers, or consultants.
Public business
This is a government-owned company or a state-controlled organization. They can operate to generate a profit, but they can also be non-commercial. Non-commercial public businesses are usually funded by fees, taxes, or government charges and are either managed by state institutions or local councils.
Non-commercial business
Non-commercial businesses are not focused on financial gains. They operate with different goals such as providing services to the public or adding value to a community.
Examples are publicly funded educational institutions, community support organizations, public libraries, and religious or philosophical societies.
Not-for-profit
Not-for-profit entities serve social, educational, or communal functions. Such organisations, which range from member-driven clubs to philanthropic groups, aim to generate funds for designated causes with voluntary membership.
While these not-for-profit businesses may occasionally engage in commercial activities, their chief aim is to serve these social, educational or communal functions.
Alternative organisational models
These are just some examples, there are also other organisational models, such as partnership or joint liability companies.
Interested in getting started? These are the key differences between a sole trader and a limited liability company.