A business is defined as any type of enterprise entered into by a person or group to earn a profit. Business enterprises can be either private or for-profit entities that operate to meet a social purpose or further an educational objective. Although the main goal of business activities is to earn profits, they are sometimes undertaken with the aim of developing a social venture or community at large.
Developing a market economy has brought up several questions like what constitutes a business and how does it differ from a corporation? Basically a business exists when the assets and liabilities of an entity are controlled by one entity. In a corporation, all the shareholders or owners of the corporation own and control the business. All the property and assets of the business are owned by the corporation. A private firm on the other hand, is not a business but a separate entity from the owner and has the same characteristics as any other business.
However, unlike a corporation, there is no formal corporate structure; it is usually a one-owner partnership. A partnership disposes of its share capital (the income it receives), whereas a corporation uses its share capital to acquire new assets and hire new employees. Consequently, there are two types of capital: debt and share capital. Debt capital is used to finance the purchase of tangible assets, while share capital funds the development of new ventures. The total number of outstanding debts and assets of a business will determine its capacity to earn profits.