1.2 Types of Business Entities Flashcards
Private Sector
> Organisations owned by individuals or a group
Don’t confuse with public/private businesses which are both under private sector
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 gov to allocate funds to other priorities
Overlap of public and private sector
PPP/s (Private Partnerships)
> Purpose to deliver service 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
> Business structure that is member-owned (min 5 members)
Focuses on servicing members rather than member owners
Minimises exploitation of weaker members of companies
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