Business Law 5-2

[Randell Magtoto]

Businessis the practice of making one's living or making money by producing or buying and selling products (such as goods and services).[1][2][3][4] It is also "any activity or enterprise entered into for profit."[5]

A business entity is not necessarily separate from the owner and the creditors can hold the owner liable for debts the business has acquired.[citation needed] The taxation system for businesses is different from that of the corporates. A business structure does not allow for corporate tax rates. The proprietor is personally taxed on all income from the business.

Corporations are distinct from with sole proprietors and partnerships. They are separate legal entities and provide limited liability for their owners and members. They are subject to corporate tax rates. They are also more complicated and expensive to set up, but offer more protection and benefits for the owners and members.

In legal parlance, the owners of a company are normally referred to as the "members". In a company limited or unlimited by shares (formed or incorporated with a share capital), this will be the shareholders. In a company limited by guarantee, this will be the guarantors. Some offshore jurisdictions have created special forms of offshore company in a bid to attract business for their jurisdictions. Examples include "segregated portfolio companies" and restricted purpose companies.

Companies are also sometimes distinguished into public companies and private companies for legal and regulatory purposes. Public companies are companies whose shares can be publicly traded, often (although not always) on a stock exchange which imposes listing requirements/Listing Rules as to the issued shares, the trading of shares and a future issue of shares to help bolster the reputation of the exchange or particular market of exchange. Private companies do not have publicly traded shares, and often contain restrictions on transfers of shares. In some jurisdictions, private companies have maximum numbers of shareholders.

A parent company is a company that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors; the second company being deemed as a subsidiary of the parent company. The definition of a parent company differs by jurisdiction, with the definition normally being defined by way of laws dealing with companies in that jurisdiction.

Accounting is the measurement, processing, and communication of financial information about economic entities[15][16] such as businesses and corporations. The modern field was established by the Italian mathematician Luca Pacioli in 1494.[17] Accounting, which has been called the "language of business",[18] measures the results of an organization's economic activities and conveys this information to a variety of users, including investors, creditors, management, and regulators.[19] Practitioners of accounting are known as accountants. The terms "accounting" and "financial reporting" are often used as synonyms.

Commerce is the process of exchanging goods and services.[20]It is not just a single activity, but a set of activities that includes trade (buying and selling goods and services) and auxiliary services or aids to trade,[21] that includes communication and marketing, logistics, finance, banking, insurance, and legal services related to trade. Business is also defined as engaging in commerce, as these are done in all businesses.[22]

Finance is a field that deals with the study of money and investments. It includes the dynamics of assets and liabilities over time under conditions of different degrees of uncertainty and risk.[23]In the context of business and management, finance deals with the problems of ensuring that the firm can safely and profitably carry out its operational and financial objectives; i.e. that it: (1) has sufficient cash flow for ongoing and upcoming operational expenses, and (2) can service both maturing short-term debt repayments, and scheduled long-term debt payments.Finance also deals with the long term objective of maximizing the value of the business, while also balancing risk and profitability; this includes the interrelated questions of (1) capital investment, which businesses and projects to invest in; (2) capital structure, deciding on the mix of funding to be used; and (3) dividend policy, what to do with "excess" capital.

Human resources can be defined as division of business that involves finding, screening, recruiting, and training job applicants.[24] Human resources, or HR, is crucial for all businesses to succeed as it helps companies adjust to a fast-moving business environment and the increasing demand for jobs.[24]

The term "Human Resource" was first coined by John R. Commons in his novel 'The Distribution of Wealth'. HR departments are relatively new as they began developing in the late 20th century. HR departments main goal is to maximize employee productivity and protecting the company from any issues that may arise in the future. Some of the most common activities conducted by those working in HR include increasing innovation and creativity within a company, applying new approaches to work projects, and efficient training and communication with employees.

Two of the most popular subdivisions of HR are Human Resource Management,[25] HRM, and Human Resource Information Systems, [26] or HRIS. The HRM route is for those who prefer an administrative role as it involves oversight of the entirety of the company. HRIS involves the storage and organization of employee data including full names, addresses, means of contact, and anything else required by that certain company.

Many businesses have an Information technology (IT) department, which supports the use of information technology and computer systems in support of enterprise goals. The role of a Chief Information Officer is to lead this department. For example, Ford Motor Company in the United States employs "more than 3,000 team members with advanced computing, analytical and technical skills".[27]

Manufacturing is the production of merchandise for use or sale using labour and machines, tools, chemical and biological processing, or formulation. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale.

Marketing is defined by the American Marketing Association as "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large."[28] The term developed from the original meaning which referred literally to going to a market to buy or sell goods or services. Marketing tactics include advertising as well as determining product pricing.

Research and development refer to activities in connection with corporate or government innovation.[29] Research and development constitute the first stage of development of a potential new service or product.[30] Research and development are very difficult to manage since the defining feature of the research is that the researchers do not know in advance exactly how to accomplish the desired result.[30]

Injuries cost businesses billions of dollars annually.[31] Studies have shown how company acceptance and implementation of comprehensive safety and health management systems reduce incidents, insurance costs, and workers' compensation claims.[32] New technologies, like wearable safety devices[33] and available online safety training, continue to be developed to encourage employers to invest in protection beyond the "canary in the coal mine" and reduce the cost to businesses of protecting their employees.

The efficient and effective operation of a business, and study of this subject, is called management. The major branches of management are financial management, marketing management, human resource management, strategic management, production management, operations management, service management, and information technology management.[35]

Owners may manage their businesses themselves, or employ managers to do so for them. Whether they are owners or employees, managers administer three primary components of the business's value: financial resources, capital (tangible resources), and human resources. These resources are administered in at least six functional areas: legal contracting, manufacturing or service production, marketing, accounting, financing, and human resources.[citation needed]

In recent decades, states modeled some of their assets and enterprises after business enterprises. In 2003, for example, China modeled 80% of its state-owned enterprises on a company-type management system.[36] Many state institutions and enterprises in China and Russia have transformed into joint-stock companies, with part of their shares being listed on public stock markets.

Business process management (BPM) is a holistic management approach focused on aligning all aspects of an organization with the wants and needs of clients. BPM attempts to improve processes continuously. It can, therefore, be described as a "process optimization process". It is argued that BPM enables organizations to be more efficient, effective and capable of change than a functionally focused, traditional hierarchical management approach.[who?]

Many businesses are operated through a separate entity such as a corporation or a partnership (either formed with or without limited liability). Most legal jurisdictions allow people to organize such an entity by filing certain charter documents with the relevant Secretary of State or equivalent and complying with certain other ongoing obligations. The relationships and legal rights of shareholders, limited partners, or members are governed partly by the charter documents and partly by the law of the jurisdiction where the entity is organized. Generally speaking, shareholders in a corporation, limited partners in a limited partnership, and members in a limited liability company are shielded from personal liability for the debts and obligations of the entity, which is legally treated as a separate "person". This means that unless there is misconduct, the owner's own possessions are strongly protected in law if the business does not succeed.

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