A business is pretty much defined as any entity or company engaged in business, commercial, or economic activities for the benefit of others. In simple terms, business means dealing with the exchange of goods and services for a profit. Business enterprises may be private or public; they may be owned by individuals or corporations. Large-scale businesses are run by large financial groups of people. A corporation is a separate entity from its owner.
In most states, business entities are created by filing Articles of Organization with the state business authority. This document provides information about the nature of the business, the nature of its assets and liabilities, and the names and amounts of each member’s equity. Also included in the Articles of Organization is a list of the corporation’s officers. All of these things are essential to make sure that all creditors, employees, and members are protected under the laws of the state. It is also essential to provide notice to the powers that be that the business will now be conducting business. Usually this notice must be filed with the secretary of state.
Business entities come in two basic forms. One is the sole proprietorship, which can only be owned by one person. The other type of entity is a partnership, which may be operated by a number of people who are not necessarily owners. Many businesses today exist without any original shareholder. In many cases, a business exists because it has numerous partners.
Intellectual property is the main issue of contention between businesses. Ownership of the intellectual property of a corporation is limited to the extent of its investment in the property. But just what constitutes the investment of the corporation’s assets? There are two main articles of organization in commercial law. These main articles are referred to as the capital assets and the liability securities.
The capital assets include the paid-in capital of the corporation. The capital account, also known as the cash flow account, records the value of the assets, liabilities, and claims as they are paid-in. The second main article of organization is known as the strategic management. This strategic management includes all the various ways in which the business produces and distributes the products or services to its customers. All these procedures must be properly documented in the corporate records.
There are many ways in which a business can incorporate. One way is by taking out a separate legal right in the form of a corporation. Another way is through an initial public offering, or IPO, of the corporation. Another method through which businesses incorporate is through the chartering of the partnership.
What kind of tax benefits a business entity is allowed to take advantage of depends on how it was established. A business entity can be considered a partnership for income tax purposes if it was established for profit. The only tax benefit that a corporation is allowed to enjoy is if it is an S corporation, which is treated as a pass-through entity. This means that the income or profits of the corporation are actually taxed upon the dividends it receives. Thus, any dividends paid by the corporation are taxable and the corporation is taxed on its shareholders’ income, not the income of the corporation.
What kinds of tax benefits a business can enjoy greatly depends on how it has been incorporated. The first category is that of property taxes. Businesses which have a fixed asset value but which do not need to be used in business operations are entitled to be exempted from property taxes. The second category of taxation is that of payroll taxes.