The central link in a market economy is business entities. These are large corporations and small entrepreneurs who can make one deal a week or make several hundred sales a day. The range of legal forms is very wide, they determine the profile and industry, rights, obligations and internal and external rules of conduct in the enterprise.
Legislation and terminology
There are two types of legal entities: non-profit and commercial organizations. All of them are full participants in the economic process. At the same time, they have a completely different legal status.
Which organizations are recognized as commercial? The Civil Code does not have a clear definition for such organizations. Only in articles 48, 49 and 50 are the characteristics of such organizations formulated.
These signs give an understanding that a commercial organization is a legal entity whose main purpose of entrepreneurial activity is only to generate income. Such enterprises are allowed to engage in any activity that is not prohibited by regulatory enactments.
Signs
What is a commercial organization? In light of the fact that the company will be engaged in profit-making, information on this should be displayed in its statutory documents. If such information does not exist, then it is possible to receive a refusal even during the registration of an enterprise.
Organizations have general legal capacity, that is, they have the right to engage in any type of activity, within the framework of the current legislation. However, there are some restrictions, in particular for municipal and unitary enterprises. They have the right to engage only in those activities for the implementation of which they were created. There are also restrictions in the financial sector, for example, banks and insurance companies can no longer engage in any activity.
Another mandatory feature, the creation of a commercial organization should occur through state registration and only after it does it become a full participant in civil turnover.
Differences from Nonprofits
It is impossible to understand what a commercial organization is without a parallel comparison with nonprofit organizations. And you can understand which organization is already on the first sheet of the charter of a legal entity. That is, you should only read the purpose of creation, if profit does not mean there, then this is a non-profit enterprise.
There is another way to determine, because it is not always possible to look at the charter. According to the legal form, you can also determine the type of organization.
Forms of legal entities
All forms of enterprises that fall under the concept of a commercial organization are described in article 50 of the Civil Code.
- Business companies - this is the most common form, it can be a closed joint stock company or PAO, LLC.
- Production cooperatives. To date, they are quite rare, the peak of popularity occurred in the 90s.
- Business partnerships. Generally the rarest form.
You can also open an enterprise in the form of a peasant or farm, a business partnership or partnership. Local and state bodies have the right to open unitary and municipal enterprises.
Non-profit form includes all enterprises that do not fall under the concept of commercial. Most often we come across political parties, lawyers, public organizations, and so on. The main reason for their creation is the achievement of humanitarian, social, educational and other goals not related to generating income.
How to make a choice?
Based on the purpose of entrepreneurial activity, choosing the form of your future enterprise, you need to pay attention to some points:
- the scope of the future enterprise and the planned scope;
- all risks that may arise;
- the degree of property liability that the founders can take upon themselves;
- maximum number of founders;
- how will the key decisions be made;
- profit distribution procedure;
- features of taxation.
Functions
In the process, a commercial organization performs a number of functions, namely:
| Financial management | Today this is the main function of commercial organizations, as it consists in ensuring the financial stability of the entire enterprise and the liquidity of all economic activity. |
| Personnel Management | This function can be expressed through the reception, training and retraining of personnel. |
| New Product Creation | In this category, not only innovative processes, but also the improvement of existing goods and services, the expansion of the market and the improvement of production efficiency |
| Marketing | That is, the definition of consumer needs, market research |
| Production | This function is directly related to the goal of any commercial organization - making a profit. That is, money can be earned only through the provision of services, performance of work, production of any product |
| Logistic | This category includes not only transportation, but also cooperation, the purchase of raw materials and their processing, and so on. |
| Environmental | A process that seeks to compensate for negative environmental impacts |
| Social | This function strongly overlaps with personnel management, as it is aimed at reproducing the workforce, motivating personnel, and ensuring safe working conditions. |
Principles
Which organizations are recognized as commercial? It should be understood that any legal entity pursuing the goal of making a profit delivers something to the external environment, having previously received certain resources from it. In light of this, the following principles of commercial enterprises can be distinguished:
- Organizational and administrative isolation. This means that the company has its own property, a single governing body and staff.
- Financial and economic independence. All activities of a legal entity are based on self-sufficiency and maintains accountability.
- Industrial and technical unity. This principle is expressed in the availability of material resources, that is, it owns real estate, equipment, production facilities, etc.
Finance
Which organizations are recognized as commercial? Such enterprises cannot carry out their activities without their own financial resources, their accounting and distribution. There are two main functions of enterprises:
- Distribution. Realization of this function already begins at the stage of formation of initial capital and determination of proportions in the shares of participants. Then it is determined how the distribution of profit between the participants will take place, the procedure for using the remaining funds.
- Control. This function is expressed in accounting for production costs, sales of products and goods. This also includes the process of forming funds, including the reserve one.
Given all of the above, it is very important for each company to establish financial control in a timely manner, which is expressed in the analysis of financial indicators, budget execution, control over the distribution of funds and so on.
Which organizations are recognized as commercial? This is a legal entity with its own property, which is responsible for its obligations and does everything in order to profit from any business operations.