BUSINESS STRUCTURE Meaning and
Definition
-
Business structure refers to the legal and organizational framework that defines and governs the operation, ownership, and management of a business entity. It encompasses the arrangement of various components and departments within a company, as well as the relationships between them.
A business structure can be understood as the foundation upon which a business operates. It determines the distribution of authority, responsibilities, and decision-making processes within the organization. Common types of business structures include sole proprietorships, partnerships, limited liability companies (LLCs), corporations, and cooperatives.
The choice of business structure depends on several factors, including the size of the enterprise, the number of owners, tax considerations, liability protection, and the desired management style. Each structure has its unique advantages and disadvantages, reflecting differences in ownership rights, taxation, legal obligations, and the ability to raise capital.
For instance, a sole proprietorship refers to a business operated and owned by a single individual. This structure offers simplicity, ease of setup, and complete control over decision-making. On the other hand, corporations are complex legal entities separate from their owners, offering limited liability protection and the ability to issue shares of stock.
Overall, understanding business structure is crucial for entrepreneurs and business owners as it determines the legal, financial, and operational framework within which a business operates and paves the way for its success or failure.
Etymology of BUSINESS STRUCTURE
The word "business" originated from the Middle English word "bisynes", which came from the Old English word "bisignes" meaning "care, anxiety, occupation". It was derived from the Old English verb "bisigian", meaning "to be anxious, to care for". The change from "bisynes" to "business" occurred around the 14th century.
The word "structure" has Latin roots and comes from the Latin word "structura", meaning "a fitting together, arrangement, or organization". It originated from the verb "struere", which means "to build" or "to arrange".
Therefore, the term "business structure" is a combination of the Old English word for occupation or care (business) and the Latin word for arrangement or organization (structure). The phrase refers to the organization and arrangement of a business entity or organization.
