An enterprise for carrying out entrepreneurial activity must have a number of characteristics. Without the presence of certain mandatory signs, an organization cannot become an enterprise carrying out economic activities.
An enterprise is an autonomous economic entity created and acting in accordance with the legislation with the aim of producing products and providing services to meet the needs of consumers and maximize profits.
Commercial and non-commercial enterprises
To carry out production activities, an enterprise needs to register with the appropriate government agencies. After registration, the enterprise receives the status of a legal entity, which allows the organization to carry out production activities and independently bear legal, tax and other obligations.
All existing businesses are divided into commercial and non-commercial.
A commercial organization is a legal entity whose main purpose is to make a profit from production. Making a profit is the main activity of a commercial enterprise. Such organizations produce goods or provide services to consumers. Legal entities that are commercial organizations can be created in the form of:
- business partnerships or companies;
- production cooperatives;
- state unitary enterprises;
- municipal unitary enterprises.
Non-profit organizations are legal entities whose main purpose is not to generate profit and distribute income among participants. Such enterprises are created to achieve social, cultural, charitable, political, scientific and educational goals that are aimed at achieving public goods. These are public organizations funded by the owner of the institution, as well as various charitable foundations. Non-profit enterprises can engage in entrepreneurial activity only if this activity is aimed at achieving public goods.
Enterprise attributes
The status of a legal entity obtained by an organization after passing through state registration presupposes the mandatory presence of the characteristics of an enterprise. The following characteristics of a company exist:
1) The organization must own separate property, i.e. the presence of elements, area, equipment that will allow the enterprise to independently produce products or provide services.
2) The ability of an enterprise, as a legal entity, to respond with its own property for existing obligations. Such obligations arise to creditors or in the event of budget default.
3) By acquiring the status of a legal entity, the organization acts in economic circulation on its own behalf. This means that the enterprise, when concluding civil law contracts, relationships with consumers, suppliers of raw materials, etc. speaks on his own behalf, and not through intermediaries.
4) The company has the right to participate in legal proceedings both as a plaintiff and a defendant.
5) The organization must have an independent balance sheet or estimate, i.e. the enterprise must keep records of profits and costs.
6) The company must have its own name and act on the basis of the articles of association or articles of association.
These features are fundamental to the definition of an enterprise.
Thus, an enterprise is an independent economic entity that has a number of rights and obligations and has a mandatory number of characteristics that define this organization.
