A Economic entity Is a person or organization that carries out economic activities and which is formed by material, financial and human resources.
These resources are managed and administered by a control group that makes the decisions of the use of the same to fulfill the ends with which the economic entity was created.
The economic entity is one that pursues particular economic purposes where there is a set of resources available, with its own structure, that are aimed at specific purposes. It also associates the economic entity as the control center for decision making that achieve certain specific purposes.
In order to produce a clear identification, it is necessary to take into account the two criteria mentioned; Which has its own resources and is under a single control center.
The identifiable unit does not refer in itself to a natural person or a moral person, but to a possible set of them.
Who or who can be an economic entity?
The economic entity can be a natural person or moral person, which will have name or social name, address, individual or moral, nationality and heritage.
The assets of the economic entity's resources are human resources, material resources, financial resources and technical resources.
There are two types of economic entities depending on their purpose. They may be for-profit entities or entities for non-profit purposes.
The lucrative entity is that which carries out economic activities, is made up of combinations of human resources, materials and capital, managed in order to achieve a performance. Its main attribute is to give back to investors.
The non-profit entity is that unit that carries out economic activities combining human resources, materials and capital in order to obtain a social good. You do not have to repay your investors.
These entities seek to achieve as a purpose a social benefit. The resources are given by sponsors who receive no consideration for the materials provided.
Economic entities serving your organization
Sole proprietorship
The simplest economic entity is the individual company. This is characterized by having an owner, possessor, who is responsible for the activities and decision making of the business.
It is one of the most numerous economic entities in our society since it does not require large capital investments to form them. However, they are also the most disadvantageous because the responsibility is unlimited for the owner and it is difficult to raise funds to expand it.
Limited Liability Companies
Another type of economic entities are mercantile companies. Here we are limited liability companies, corporations, partnerships and limited partnerships.
Limited liability companies have great advantages for their training, so many decide that this is the best type of society to establish themselves in the market.
The responsibility is limited, so that before possible losses in the company, the entrepreneurs do not have to pay it with their patrimony. The procedures for its construction are also simpler than other types of societies.
Taxes are lower than for self-employed workers from a certain level of benefits. The biggest disadvantage of such partnerships is that it is not meant to attract many investors.
Anonymous Societies
Corporations are those in which capital is divided into easily transferable shares. The advantages that this company has is that it has limited liability linked to the number of shares of each inverse.
It can also be a sole proprietorship and can become publicly traded. The disadvantages of these types of societies are that they need a large initial outlay for their training, and the formalities necessary to formalize it are complex.
Collective societies
Collective societies are a type of society not very usual. In this the partners not only contribute capital to the company but also they work and they help to the management.
The greatest advantage of this type of society is the simplicity of its operation and does not require a high capital for its constitution.
The biggest disadvantage, and for which there are not many collective societies, is that the responsibility of the partners is unlimited, personal and supportive.
This means that if something happens in the company, partners have to pay with their equity, but the payment is not associated with their volume of equity, so if one of the partners does not have sufficient equity to pay the debt, Others will take care of your part.
Limited partnership
Finally, limited partnerships. This is a kind of mixture between a partnership and an anonymous society.
There are two types of partners; The groups that respond unlimitedly by the company and that work in it, and limited partners, who do not participate in management and their responsibility is limited to the number of shares they have.
The advantage is that it does not need minimal capital to form and can attract investors who do not have to participate in decision-making.
But the disadvantage is that limited partners can not take sides in the decisions of society.
References
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- [Links] Financial Accounting. McGraw-Hill. Mexico , 2004.
- BASIC, Financing; NET, Heritage. Introduction to Accounting. 2007.
- ANDERSON, Henry R.; RAIBORN, Mitchell H.; MENDOZA, Alberto García. Cost accounting basics . Continental Publishing Company, 1980.
- ANDERSON, Henry R.; RAIBORN, Mitchell H.; MENDOZA, Alberto García. Cost accounting basics . Continental Publishing Company, 1980.
- SPANIEN MINISTRY OF WORK AND SOCIAL AFFAIRS. Voluntary entities in Spain: institutionalization, economic structure and associative development . Ministry of Labor and Social Affairs, 1997.
- SASSEN, Saskia. A sociology of globalization. Political analysis , 2007, vol. 20, no. 61, p. 3-27.