A business is defined in the Merriam Webster’s Collegiate Dictionary Tenth Addition as a human enterprise involving trade or dealings involving all or part of the community normally involved in a certain trade or transactions. A business may be organized either as a sole proprietorship, partnership, corporation, partnership, or other form of business structure. A business can also be an unincorporated body or corporation organized for the purpose of conducting trade and affairs without any association with others. Business can involve all sorts of activities like production, distribution, marketing, sales, or any combination thereof. A business is made up of many different people and organizations such as owners, directors, workers, executives, employees, and customers.
In order to conduct business as a company, a business must be established and maintain several essential things. Among these necessary things are board of directors, share capital, treasury, capital stock, and financial resources (such as bank loans). Other essential things to a company include reserves for future liabilities, reserve balance, surplus, and free cash flow. All of these things are collectively known as the personal assets of the company.
On the other hand, capitalism actually refers to economic relations that produce surplus value, the end result of which is surplus income. Under capitalism, there are no private shareholders or banks to provide credit to corporations. Capital is the sole resource that corporations have to hire workers, buy raw materials, and pay wages and salaries. There are no long-term loans or credit extended to corporations. Instead, what occurs is that businesses use their own funds to make purchases and repay debts. In addition, capital is used to expand business by using it to purchase land and expand their workforce.
For a more accurate definition, both capitalism and socialism would help. Under capitalism, individuals own the assets of the corporation, while in socialism, the state owns the companies’ assets. For more accurate statements, capitalism and socialism both refer to a system where there are private shareholders that collectively own the assets of the company. Under this system, there are no banks, loans, or other forms of credit extended to corporations. However, there is credit extended to individuals through corporations in the form of loans, dividends, and interest.
Both capitalism and socialism are necessary for a healthy economy, but for an optimal business system, both are needed. The difference between the two systems lies in how they provide incentives for corporations to create jobs and invest in infrastructure, technology, and other important business needs. In capitalism, profits are the only motivation for corporations to create jobs. The profits of a company are based solely on the profits of the owners and how they invest their money into the company. However, in socialism, the government encourages corporations to create jobs and to invest in infrastructure because if they don’t, they will be taxed.
In conclusion, both a capital-intensive corporation and a non-capital-intensive one exist. Capitalizing on both types of corporations helps a small business owner achieve the goals of starting a business. Also, both types of corporations can offer a wide variety of services and products.