What is business?

Business word is the part of  our Accounting Glossary.  We can define business with following way:

Business is all activities whose aim is to earn the money. A teacher teaches his own son or daughter is not business because he is not teaching his child for the purpose of earning money. But same teacher operates his private coaching center for providing coaching services. This coaching center is his business because he wants to earn money from that coaching center. He takes risk of his investment and also interested to get high return on his investment.

For doing business, businessman has to provide goods or services to customers. After taking risk, doing hard-work and providing goods or services, businessman gets return in the form of profit. But it is his risk. Sometime, he can also suffer loss in these activities.

Forms of Business

There are four forms of business:

1st # Sole Trade

It is that form of business which is operated by single person. He takes all risks of business and gets all its profit. His liability to pay the debt is unlimited.

2nd # Partnership

It is association of two and more person who do works under the terms and conditions of partnership deed.
They divide their profit according to their profit.

3rd # Company

Company is also association of large number of shareholders whose objective is to earn the highest return on their investment and to maximize the value of their shares. These persons do not participate in trade of business. All work is done by management and other professional employees. After checking the performance of company accounts which has been made on basis of general accepted accounting principles, board of directors issue dividend. Market value of share is decided by demand and supply of shares and stocks in capital market.

4th # Other Forms of Business

These days, there are many other forms of business have been developed expect above. In these forms we can include cooperative organisations, online business, venture capital business and Networking business and many other forms.One of my friend invests his money for getting fixed return of 100% margin on investment  per month at 100% risk. These forms are also called risky business. Either your whole money will be doubled with in one month at minimum investment of Rs. 10,000 or it will be zero after one month due to risk factor of market.

Types of Business

Above forms of business is very limited but type of business in which you are interested is unlimited. This classification is done according to the nature of product and services in which you want to deal.

1. Agricultural business

This business is connected with production of raw material, seeds, vegetables, milk and cattle farming which is famous in India. 70% of India are doing agricultural activities. Cow was the its main wealth. But it is sad story of agricultural business that they are not wasting their worthy product cow by selling to butchers. That is the reason, Indian agricultural business is facing loss. All farmers of India are captured under big loans and they are busy just to pay interest on it. I think, Indian agricultural business can develop, if Indian farmer will not kill cow by selling to butchers. Even Indian laws are against this due to spiritual reasons but if we see this issue from economic or business point of view. We find that a cow's whole life is benefited for human being. If a cow is not giving milk, then its dung can be used for bio-gas plant. Himachal Pardesh is the first state of India, who is gaining profit by selling bio-gas whose raw material is cow dung.

2. Financial Business

These business include Forex, share trading and money trading and bond trading.

3. Real Estate Business

This is the big business in India and this is done in real estate market.

4. Retail Business

Retailers and Distributors act as middle-men in getting goods produced by manufacturers to the intended consumer, generating a profit as a result of providing sales or distribution services. Most consumer-oriented stores and catalogue companies are distributors or retailers

5. Service Business

There are many services like advertising, coaching, training and transportation in which big company can do the business and earn the profit.

6. Commodity Business

In commodity market, dealers buy commodity at low raw and to do the business by selling it high rate.

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Accounting Education: What is business?
What is business?
Accounting Education
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