Name of firm
What is the meaning of name of firm
Research in economics and development has attempted to explain the theories behind the existence of firms.
They have focused on how they conduct their operation to maximize their outcome and how their structure gives them competitive advantage.
However, the question that can help us to break down all these concepts is; – what is the meaning of name of firm? Some modern theories have tried to differentiate between firm models that work for long-term sustainability and those that are driven by concept of maximizing profit.
Here are some of the classifications of firms by ownership that can give you detailed understanding of firms.
A firm that is owned by one individual is known as a sole proprietorship.
In this type of a firm, the individual is liable for all costs and responsibilities that are in the business.
All the assets and the profits attained in the course of the trade belong to that individual.
This is another classification that describes a firm that is owned by two or more individuals.
Just like in sole proprietorship, the partners of that firm are responsible for any liability and responsibility that comes with owning the business.
The profits made in the firm are usually distributed according to the share capital of the individual partners.
There is no limitation to the number of partners that are in a given firm.
Corporation is another type of a firm that is similar to partnership.
However, in the case of a corporation the financial liabilities accrued in the process of running a business is separated from individual liabilities of the owners.
In other words, the individual partners are not liable for any running costs and other obligations such as lawsuits.
A corporation can be owned by both individuals and the state.
A cooperative or co-op is another type of a firm.
It is similar to a corporation in the sense that the owners of the firm also have limited liability.
However, in a cooperative the investors of the firm also determine how the firm operates.
To ascertain what is the meaning of name of firm? One has to first determine which category the firm belongs to.
The operation of the firm can also give a hint of the meaning of the name.
The name of the firm usually has legal protection that covers even the employees.
A firm that is owned by multiple people is referred to as a company and usually has more legal protection for their employees.