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.
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.