Types of business entities. Business Law

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Business entities are persons who carry out business activities on a professional and permanent basis. These may be persons with or without the formation of a legal entity. All these subjects of law have certain property rights, are endowed with rights and obligations at the level of legislation and must be registered in accordance with the procedure established by regulatory enactments.

Signs

All business entities must meet certain criteria:

• to own (dispose of) property and bear full responsibility for it;
• be competent;
• have property and non-property rights;
• manage the process of activities personally or through authorized persons;
• register your activities as required by applicable law.

In addition, a citizen engaged in entrepreneurial activity must meet certainrequirements:

• have full legal capacity;
• have a permanent residence.

For individual entrepreneurs there is one more requirement - for debts formed in the course of doing business, they are liable with their own property. In the absence of property, a compulsory bankruptcy procedure is carried out.

Main types of classifications

The legal status of business entities implies doing business as an individual entrepreneur or legal entity.

Individual entrepreneurs are the simplest form of business in which a citizen operates without creating a legal entity, but with full responsibility for possible negative consequences with his own property.

Legal entities are therefore required to form a legal entity, and are classified broadly. First of all, they can be commercial and non-commercial. The latter form of doing business does not involve making a profit, although this is not prohibited by law, provided that this is provided for in the statutory documents and does not contradict the main goal of creating an enterprise. The following classification involves the gradation of business entities according to the organizational and legal form. This is actually a business structure established at the level of legislation with the definition of the duties and rights of the founders, with the established rules for the formation of an enterprise, property and the procedure for functioning. At the levelLegislation clearly spells out all kinds of organizational and legal forms, namely in the Civil Code, however, a number of requirements are provided for by separate regulations.

There is another classification that allows you to distinguish types of business entities according to three criteria:

1. Companies that do not have their own property, but dispose of it on the basis of operational or economic management. A vivid example is unitary enterprises.
2. Formations with rights of obligation, that is, the founders have the right not only to receive profit from economic activity, but also to part of the property in the event of liquidation. For example, consumer cooperatives.
3. Non-profit companies whose founders do not have property rights.

Unincorporated business

This category includes individual entrepreneurs - individuals, also heads of farms after official registration.

The main rights and obligations of such formations include:

• the obligation to answer for debt obligations with your own property;
• have the right to form a legal entity;
• for individual entrepreneurs, a judicial bankruptcy procedure is provided.

For the rest, the rules for legal entities apply to such persons.

The legislation provides for another form of enterprises without forming a legal entity - a simple partnership orassociation of individual entrepreneurs (two or more). Such persons combine their material resources on the basis of an agreement to achieve maximum profit, without forming a legal entity. All participants in this case are jointly and severally liable.

Business companies

There are several types of business entities in this category: JSC, LLC, ALC. They all have several similar features:

• presence of charter;
• issue of shares through open or closed subscription;
• public reports of their financial activities;
• the presence of controls of two or three levels.

Non-profit organizations

The main distinguishing feature of entrepreneurial activity in this case is the absence of a goal in the form of making a profit.

According to the organizational and legal form, enterprises can be created in the form:

1. Funds. This form does not imply membership. Created to achieve social, educational or cultural or other goals. The founders are not liable for the fund's debts.
2. Consumer cooperatives. Created on a voluntary basis by pooling property contributions.
3. Religious or public organizations. They are also voluntary formations, but are created on the basis of common interests.
4. Unions or associations between legal entities. Created to coordinate efforts to achieve common goals, often professional.

Subjectsentrepreneurial activities are independent and legally independent, they manage property. The material basis of such units is formed by membership voluntary contributions, which may be paid on a regular or irregular basis. At the same time, consumer cooperatives can distribute and receive profits, their activities are regulated not only by the norms of the Civil Code, but by separate federal acts.

Municipal and state unitary enterprises

A distinctive feature of these types of business entities is the lack of property rights, while enterprises have property, but on the basis of operational or economic management. In light of this, it is indivisible, cannot be distributed into shares or contributions, and is wholly owned by the state or municipally owned.

Such enterprises are formed to solve government problems, when property is not subject to privatization, or to implement social problems, provide subsidized activities.

Production cooperatives

This type of business entity is also called an artel and is created on a voluntary basis, by combining citizens, their economic, industrial activities, share contributions and other things. Artels can even include legal entities.

The main task of the production cooperative is processing, production, marketing mainlyagricultural products, household services and other services. In this case, the legal entity included in the composition can perform certain services or works.

All members of the artel bear subsidiary liability, the amount of which is established at the level of legislation. The name of such an enterprise must contain the word "artel" or "production cooperative". In such companies there is no authorized capital, and all common property is divided into shares.

Conclusion

A complete list of possible types of economic activity can be found in the all-Russian classifier (OKVED-2). But in general, all types of activities can be conditionally divided into 4 categories: production, financial, commercial and advisory.