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Characteristics of corporations, enterprises, companies, and businesses

The terms corporation, enterprise, company, and business are often used interchangeably; however, they have distinct meanings. In law, only individuals as natural persons and corporations are legal entities. A juristic person is a group of natural persons behaving as if they are a single group as a partnership, limited liability company, or corporation, and can exist for many reasons. An enterprise is either a sole proprietorship associated with a natural person, or a juristic person. A business can exist to earn revenue from customers in order to generate a profit for its owners regardless of legal form.

A corporation is a legal entity that is separate and distinct from its owners. In the United States, corporations are organized under state law according to articles of incorporation. However, both the Federal and state governments may form corporations for commercial and governmental activities. Federally chartered banks are designated as national associations or national trust and savings associations. According to law, there must be some indication in the name of the corporation that it is incorporated. For example, “The Business Leadership Development Corporation” and “Javazona Cafes, Incorporated” (abbreviated to “Javazona Cafes, Inc.”) are two incorporated legal entities.

An enterprise is a group of activities intended to produce income for profit as a business, as a not-for-profit association, or as a government agency. An enterprise can consist of one or more legal entities.
In its simplest form, a company is a group of individuals who are associates or companions, as opposed to a group of individuals assembled with no distinct purpose. A team is a tightly coupled group working coherently with mutual accountability. In effect, a company is set of teams working together with common purpose.

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Enterprises, entities, and all that

The word “enterprise” means “undertake for a prize or cause.” An enterprise is a group of activities organized as a business for profit, as a not-for-profit association, or as a government agency, and comprises one or more entities. An entity is formed, organized, and operated under Federal and/or state laws, which may permit or deny certain activities. Operators of enterprises have to be aware of those entities that are suitable to their situation.

Enterprises…

Entrepreneurs transform ideas into products and/or services or causes through activities that may ultimately become enterprises. Under Federal and/or state laws, these activities must be conducted through appropriate legal vehicles. A legal vehicle is the type of entity for a specific situation based upon purpose, location of property (situs), and physical presence (nexus). The choice of legal vehicle and nexus determines the protections that are available for assets and the methods of taxation or exemption from taxes.

Associations, organizations, businesses, and not-for-profits…
An association represents a group of individuals who have voluntarily formed an organization to achieve a certain purpose. An organization is a generic term for an enterprise, entity, or a component thereof.

A business is an occupation, profession, or trade delivering products and/or services for an intended profit. “Not-for-profit” is a general term; “non-profit” entities include those that are exempt from certain taxes under the Internal Revenue Code and state laws. Non-profits are associations that are either unincorporated or incorporated, or trust funds and foundations. Their activities address agricultural, arts and entertainment, educational, health care, labor, religious, social, scientific, sports, or other charitable causes. Government agencies exist at Federal, state, county, and municipal levels.

An organizational unit is a component of an enterprise, such as a division, department, branch, plant, product line, business line, or business unit. Organizational units can exist within or across entities.

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Understanding financial, managerial, and regulatory accounting and reporting concepts

Every enterprise has to file regulatory reports with both Federal and state agencies. Managerial reports are necessary for internal control and decision making, and financial reports are necessary for investors and creditors such as financial institutions. Financial, managerial, and regulatory reports should be reconciled to ensure that the differences between information reported externally and internally, and vice versa, are fully understood.

The reporting burden on enterprises and their associated business and legal entities is significant.

An enterprise consists of one or more business entities for which management has to keep accounts and report financial condition and performance to regulators such as the Internal Revenue Service (IRS) and the equivalent state revenue agencies. Those enterprises that have employees must report payroll information to the IRS, the Social Security Administration, and state revenue and unemployment agencies. Those enterprises that sell securities must report financial condition and performance to the Securities and Exchange Commission (SEC). Reports may also have to be filed with the United States Immigration and Citizenship Services, the United States Department of Labor, the United States Bureau of Customs and Border Protection, and various other Federal and state agencies. Counties and municipalities may require reports too. Those enterprises doing business outside the United States may have to file reports to foreign governments. Taxes, duties, and fees are paid either with the report filings, or separately, depending on regulatory requirements. If paid separately, the payments have to be reconciled to the report filings. Legal entities may have to report financial condition and performance to regulators such as state corporation agencies.

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