What is mean

 The term business organization describes how businesses are structured and how their structure helps them meet their goals. In general, businesses are designed to focus on either generating profit or improving society. When a business focuses on generating profits, it is known as a for-profit organization. When an organization focuses on improving the social good through the arts, education, health care, or some other area, it is known as a nonprofit (or not-for-profit) organization and is not typically referred to as a business.

There are different categories of business organizations that relate to how the business is established, owned, and operated. The basic categories of business organization are sole proprietorship, partnership, and corporation. Each type of business organization has benefits as well as disadvantages. For example, a sole proprietor of a small business is able to operate independently of much of the government regulation that affects larger businesses, but he or she is liable (responsible) for all financial risks of the business. Therefore, the owner of a small grocery store is able to keep all the profits for herself, but she is also liable for all of her business debts, even if she must repay a debt with her personal finances.

No matter how a business is organized, it takes on certain risks as it operates. One way to minimize risk is for a business to use its assets and investments wisely, whether these are equipment, knowledge, property, or relationships. The more efficiently a business uses its assets, the greater the chance that it will make a monetary profit.

Business organization affects how a business is treated under the law. State and federal governments provide incentives and rules for every type of business organization. Profitability in industry helps a country’s economy grow, so governments generally support corporations by passing laws that protect investors from liability for the debts of the business.

When Did It Begin? Contemporary forms of business organization have their roots in the Industrial Revolution. During the Industrial Revolution, manual labor was largely replaced by machine-based labor. Industry developed around factories in which machines, not people, were the primary tools of production. Many individuals, artisans, and family groups ceased working in homes, in small workshops, and on farms and took factory jobs offering pay for unskilled labor. As organizations became more focused around machines, they divided up responsibilities among workers and developed chains of command to organize workers and managers in order of authority. Individual worker’s jobs became more specialized and more routine.

More detailed information

The three main categories of business organization are sole proprietorship, partnership, and corporation. Ownership is one of the most important features of business organization. A sole proprietorship is a business with a single proprietor, or owner. It is the most basic type of for-profit organization and the least regulated by government. The owner of a sole proprietorship makes all the decisions about the business and is free to keep all the profits he or she makes from the business. However, the owner is also solely liable (responsible) for the debts of the business, meaning that his or her personal assets are at risk if the business cannot repay its debts

When two or more people choose to own and operate a business together, the business is known as a partnership. In a general partnership, all the owners share in the financial profits and losses, and they share the liability for all of the debts. In a limited partnership, one or more of the owners (called the general partners) run the business and have unlimited liability, or are held entirely responsible for the business’s debts. But there may also be limited partners in the business who invest in the business and have only limited personal liability for the business’s debts.

Sole proprietorships and partnerships are popular types of businesses. In fact, there are more sole proprietorships than any other type of business. However, most large businesses in the United States are corporations. Corporations are organized very differently from proprietorships and partnerships. The ownership of a corporation is not connected to one individual or a small group of individuals; ownership of a corporation is represented by shares of stock that can be transferred between owners, or stockholders. A corporation is a legal entity in the same sense that an individual person is, meaning that the corporation has designated rights, responsibilities, and privileges. When a corporation borrows money, it does so in its own name (instead of in the name of its original founders or any other persons). As a result, the liability for the company’s debts is limited; the most a stockholder can lose is the amount he or she has invested. A large corporation can have millions of owners, or stockholders.