What Are Business Profits?
A business is defined as any entity or person engaged in business, commercial, or professional activities for profit. Business enterprises may be sole proprietorships, partnership, corporations, cooperatives, public utilities, non-profit organizations, and privately run organizations. In a more international perspective, the term “business” can also mean the processes involved in bringing together persons to conduct certain transactions or to meet the requirements of others. A business also refers to the organized activities and dealings of people to make and sell products and services to other interested parties for gain.
The word “profit” in business therefore refers to the income obtained from the sale of goods, services and investments. There are two broad classes of businesses: sole proprietor or partnership, and corporation or partnership. In the case of a sole proprietor, the owner of the business actually performs all the tasks involved in the business. He owns the buildings and facilities; he cooks and serves the meals; and he manages and maintains the inventory. In the case of a corporation, all the share holders of the company actually benefit from the company’s activities.
Examples of businesses include retailing, merchandising, manufacturing, trade and service, finance, real estate, construction, intellectual property, and many others. Profits are the difference between the value of the goods produced and the price paid by the seller. There are two main ways to create profits: through the sales of products and services and through the rental or lease of property. In all businesses, however, there will always be some amount of loss, since no business can exist without losing some money. This is why businesses must be managed and operated carefully to avoid too much loss. Some examples of businesses that experience a lot of losses are retail stores, wholesale clubs, hotels and motels, gasoline companies, airlines, and some types of landlords.