- Ownership & Liability
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There are three ways in which a business can be owned:
Private
Private
Space X is an example of a privately held company that was founded by entrepreneur, Elon Musk on March 14th, 2022. The correct business name is Space Exploration Technologies Corporation. The Business was incorporated in Delaware USA and has its registered business address in California.. The business is overseen by a board of directors as listed on the following US Securities and Exchange Commission form.
Public
Public
Apple Inc. is an American multinational corporation and technology company headquartered in Cupertino, California, in Silicon Valley.
Apple was founded as Apple Computer Company on April 1, 1976, to produce and market Steve Wozniak's Apple I personal computer. The company was incorporated by Wozniak and Steve Jobs in 1977. Check out the information on the leadership and governance of Apple Inc. here.
Non-profit
Non-profit
Save the Children Federation, Inc. (SCUS) was established in 1932 and operates as a voluntary, nonsectarian, nonprofit organization in the United States of America and throughout the world providing services for children and community self-help assistance.
You can explore the organisation's accounts here.
Ownership:
Ownership:
Out of the three ownership structures, the majority of businesses fall under the private ownership structures.
Private Businesses
Private Businesses
Private businesses are owned by people with the aim of making a profit. However, in exchange for this they are liable for all aspects of the business and are likely to take many risks.
Private businesses range in size from just one person to multiple partners across many different types of ownership which include:
Sole trader
Partnership
Private limited company
Public limited company
Cooperative
Public Sector Businesses
Public Sector Businesses
Business organisations that operate in the public sector consist of those controlled by a regional and/or national government, with the main aim being to provide essential goods and services for the general public. Such businesses can, but do not always, directly charge customers for such services. In some cases, such as government housing or state-funded education, the service is provided by and/or funded by the government.
Examples of such goods and services deemed to be of benefit to society, but would be underprovided without the public sector, include:
Infrastructure
Housing (public and social housing)
Health care services
Education
The table below outlines the main features of firms in public and private sectors of the economy, and how they differ.
Feature
Ownership and control
Motive (motivation)
Types of organisations
Operating mechanism
Employment and economic contribution
Private Sector
Owned and operated by private individuals or businesses.
Driven by the goal of making profits for private owners and shareholders.
Includes sole proprietorships, partnerships, private limited companies, and social enterprises (including cooperatives).
Operates based on market forces of demand (such as consumer choice) and supply (such as competition).
Significant employer contributing to teh economic growth and development of the country as a whole.
Public Sector
Owned and operated by government bodies and state-owned firms.
Driven by the goal of providing services to the general public.
Includes government departments (such as the tax authorities), public enterprises, and regulatory bodies.
Operates based on government decisions, policies, and regulations.
Significant employer providing stable employment and essential public services
Non-Profit Businesses:
Non-Profit Businesses:
A non-profit organization is an entity that is created and operated for charitable or socially beneficial purposes rather than to make a profit for example they might serve religious, scientific, charitable, educational, literary, health, or animal welfare purposes. ICS Addis is a non-profit organisation. Non-profit businesses don't neatly fit into the private (for-profit) sector or the public sector. because they are not owned by individuals (and they do not issue shares) or the government - instead, they are overseen by a board of directors.
In the U.S. and the majority of jurisdictions around the world, nonprofit organisations are granted tax-exempt status. Donations made to a nonprofit organization are typically tax-deductible and the nonprofit itself pays no tax on donations or on money earned through other fundraising activities - because the organisation recieves these generous tax breaks, there are significant regulatory and accountability requirements for these organisations. For example:
A nonprofit must serve the public in some way, and
They are required to make financial and operating information public so that donors are informed about how their contributions have been used.
Liability
Liability
The state of being responsible for something, especially by law.
'Liabiltiy' is a business term that clearly identifes the extent to which the business owner (or owners) are responsible (or liable) for the debts or actions of a business. There are two 'types' of liability:
Unlimited Liability: The business owners are wholly responsible for any losses, claims or debts that the business faces. (There are no limits on the liability that the owners face).
To protect the business against the risk of being sued or being legally held responsible, business owners can purchase insurance in a similar fashion to a person purchasing car or home insurance which can provide cover for the business against damages and legal costs that may be made against the business.
Limited Liability: The liabilites that the business owner's face for any losses, claims or debts from the business is limited to the ammount of money that they have invested into the business. (There are limits to the liability that they face).
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