The organizational and legal form is the form of an economic entity, which is recognized by law. It fixes the way of securing and using property by the subject, as well as his legal status, the purpose of the activity.
Individual and collective organizational and legal forms of entrepreneurial activity
The simplest form of organizational and legal form of a business entity is individual entrepreneurship. In this case, only one owner owns all the funds, who independently disposes of the proceeds and bears financial responsibility for their actions. For example, when debt is formed, the entrepreneur pays with his own property. An individual entrepreneur can work alone, but he has the right to hire workers.
All other forms of business are considered collective. These include commercial and non-profit organizations, partnerships, corporations, business societies, cooperatives, and state enterprises. Profit making for non-profit organizations is not the main goal, these amounts are used for self-development and are not distributed among the participants. Commercial organizations are created for profit. These include partnerships and companies with authorized capital. A partnership is an organizational form of entrepreneurship in which the formation of the authorized capital and activities are carried out by two or more persons. Each of them has certain responsibilities and rights depending on the size of the share in the authorized capital.
Business companies
An organization, the authorized capital of which is formed by one or more persons through the contribution of shares, is called a business company. There are four forms of such business entities: a limited liability company (LLC), an open joint stock company (OJSC), a closed joint stock company (CJSC), a company with additional responsibility. The founder of a limited liability company (LLC) is one or more persons who are liable for obligations only within the limits of the contributions made by them.
A type of LLC is an additional liability company. Its authorized capital is divided into shares, and the participants of such an organization are liable for the obligations of the organization with their property in the same amount for all, a multiple of the amount of their contributions. A joint-stock company is a company whose authorized capital is divided into shares, its participants cannot be responsible for the company's obligations. The shares of a closed joint stock company are distributed only among its founders. A joint stock company, whose members have the right to freely buy and sell its shares, is called open.
Corporations, cooperatives, state-owned enterprises
A corporation is a legal form of business that is restricted from the persons who own it. It has the status of a legal entity and can perform functions that are performed by other business enterprises. Production cooperatives (artels) are a voluntary association of legal entities and citizens (at least five people) on the basis of membership, share contributions and personal labor participation in economic activities. The received profit is distributed among its members depending on labor participation in the activity.
A state-owned enterprise is a production unit, the property and management of which is partially or wholly in the hands of government agencies. In its activities, such an enterprise is guided not only by making a profit, but also by the desire to satisfy the needs of society.
