1.2 Types of Business Entities Flashcards
Private Sector
> Organisations owned by individuals or a group
Consists of private and public companies
Public Sector
> Government owned and managed organisations
Funded by government > taxes
e.g. Healthcare, Education
Privatisation
A public sector organisation going into private sector, to allow government to allocate funds to other priorities
Overlap of public and private sector
PPP’s (Private Partnerships)
> Purpose to deliver services traditionally provided by the public sector
What sector is for-profit commercial enterprises under?
Private sector
What goes under for-profit commercial enterprises?
> Sole trader
Partnerships
Private/Public companies
Sole trader
> For-profit commercial
One individual runs and owns entire business
Partnership
> For-profit commercial
Made up of two or more people who distribute income/losses with each other
Private company
> For-profit commercial
Owned by small group of founders, private investors
Does not sell stock shares to the public
Public company
> For-profit commercial
Open to investment by public
Sells shares to the public at large on market (NY Stock Exchange)
Business vs Company
Business: All entities
Company: Corporated and owned by shareholders and only two types (public/privately held)
Incorporation
> Legal process of a sole trader becoming a company/corporate entity
The owner is now a shareholder
Limited liability - to company not to personal assets of the owner
Legal separation of owner and business
What goes under for-profit social enterprises?
> Public and private sector companies
Cooperatives
Cooperatives
> For profit social enterprise run by their members (employees, customers)
Common goal of creating value for members
All members contribute to decision making and profits are shared between members
Social vs Commercial for-profit enterprises
> Social (SPO’s): Main purpose is around social objectives, profits redirected to social objective
Commercial: Purpose is to create profitable operations for private gain