Consider the types and functions of businesses, which are entities created for the purpose of making money by producing or buying and selling products, such as goods and services. Businesses can be organized both informally and formally, ranging from modest enterprises, like a child selling lemonade in her front yard, to a multinational company that employs thousands of workers. Regardless of size, the primary goal of every business is to generate profit. The income generated by a business is known as revenue or earnings.
Many use the term business interchangeably with the word company, although they are different from a legal standpoint. A company is a separate legal entity that is more complicated and expensive to set up, but also offers more protections and benefits for the owner(s).
Businesses are subject to systems of law governing contract and exchange, property rights, and incorporation. Businesses can be owned by an individual, a group of two or more people, or by another business, known as a parent company. They can also be public or private: a public business (and public company) is traded publicly on a stock exchange; a private business (and private company) does not have publicly traded shares. A business is known as a corporation when it is owned by stockholders (or shareholders) and has a legal existence similar to a person. A corporation can buy, sell, own, enter into a contract, and sue or be sued by others. Corporations exist separately from their owners, allowing for limited liability in bankruptcy and lawsuits as well as continuity of existence—meaning their existence can live beyond the life spans of their owners.
The administration of formally established business can involve many functions, including accounting and finance, marketing, technology, research and development, sales, and manufacturing. Some employees of businesses, particularly in manufacturing, join to form a labor union in order to better advance their interests in respect to wages, benefits, and working conditions through collective bargaining.