1.2 Types of Business Entities Flashcards
Private sector
The portion of an economy not owned or directed by the government.
Multinational company
A company that operates in at least two countries, one of which is not the company’s home country.
Price
The amount of money that a business charges for its product or service.
Profit
Total revenue minus total costs.
Public sector
The portion of the economy controlled or owned by the government.
Tax
A payment by individuals or businesses to the government.
For profit commercial enterprise
A type of business that earns profits, which are distributed to owners or shareholders; profits may have prioritity over other objectives.
Unlimited liability
A situation where the owners of a business are personally responsible for all the debts of the business if it fails; the owners and the business are not legally separated.
Sole trader
A business owned and run by one person; there is no legal separation between the owner and the business.
Partnership
A business owned and run by two or more people who share the responsibility for the business and the profits; there is no legal separation between the business and the owners.
Company
A business owned by multiple shareholders who have limited liability; can be privately held or publicly held.
Shareholders
Someone who owns part of a business.
Dividends
A portion of a business’s profits distributed to the owners/shareholders.
Limited liability
A situation where the owners of a business are not personally responsible for the debts of the business if it fails; the owners and the business are legally separated.
Privately held company
A company that is privately owned and often has family or friends as the shareholders; the shares are not sold to the wider public and are not traded on a stock exchange.
Publicly held company
A company that is publicly owned and and has many shareholders who can buy and sell their shares through a stock exchange
Initial public offering
A situation where a company sells all or part of the business to external shareholders for the first time.
Social enterprise
Any organisation that has a social and/or environmental purpose at its core; it describes the primary purpose of a business, not its legal form.
For profit social enterprise
Any organisation that has a social and/or environmental purpose at its core; it describes the primary purpose of a business, not its legal form.
Value
All the benefits that a business creates for the stakeholders involved.
Private sector for-profit social enterprise
A type of social enterprise that produces goods and services that are typically sold in markets for a price by for-profit businesses.
Public sector for-profit social enterprise
A type of social enterprise that produces goods and services that are typically provided by the public sector.
Cooperative
A business owned and operated by its members, who share the profits.
Stakeholder
Any individual or group that affects, or is affected by, an organisation
Non-profit social enterprise
A type of social enterprise that produces goods and services to meet human needs, but where any surpluses earned must, by law, be reinvested back into the business.
Surplus
A situation where a non-profit social enterprise has greater revenue than costs; non-profits must reinvest the money into the enterprise.
Non-governmental organisations (NGOs)
A sub-category of non-profit social enterprises that have a purpose or mission to benefit society or the environment.
