When contemplating the role of business organizations, it helps to realize that the definition of business organization by different authors varies drastically. Typically, speaking of "business organization" means referring to how a company structures itself internally. For some, it means groups that form to advocate for and protect businesses and their interests. Each has its importance.
The Role of Internal Business Organization
When companies are formed, a large consideration is that of structure. What liabilities will they have? In whose hands will power rest for choosing everything from the direction the company goes in through to personnel hired? How will the assets and profits, as well as tax obligations, be addressed?
All these questions can be answered by deciding whether the company will be a limited liability partnership, a sole proprietorship, a corporation or any of the other legal structures a business can take, all of which are called "business organization." In making this choice, business owners choose how risk is assumed or deflected and what kind of laws might govern how they operate in any given market. Business organizations can also determine everything from regulatory constraints through to legal and clerical requirements, which are matters that must be considered for corporations, adding to their operating costs.
But, with a clear vision for the company and an understanding of what the incentives and consequences each business organization offers, owners can make strategic choices that not only protect their business ambitions but their assets too. Many new business owners don’t give enough thought to the question of how to structure themselves from a legal perspective, and if their businesses fail, they can be left on the hook for debts and other expenses. Then, of course, there’s also the risk of being sued by a consumer or other business, which is another incentive of choosing an organizational structure that limits personal liabilities. Consulting both a lawyer and tax expert may seem like an added expense for a start-up, but it can offset huge losses if things don’t work out down the line.
The Role of Social Business Organizations
Also called business associations, these organizations are formed with a view of connecting businesses within a region or industry, for myriad reasons. Business organizations like these are often considered “employer associations” as well, and they contain everything from Chambers of Commerce through to things like the Mine Owners' Association. They’re found in every city in the country and around the world, too. Whether businesses want access to an industry-specific knowledge base and support or they’re simply looking to network and create opportunities, these organizations have a lot to offer.
Socially, business organizations are often concerned with politics and regulations around doing business, and groups like the United States Chamber of Commerce have incredible political power as a large body that influences how politicians think and act through lobbying. But, beyond politics, they also are invested in their communities and their states. It’s not uncommon to see them playing a role at the local level, through events meant to bring communities together or to evangelize local businesses.
Business owners can get a lot out of these organizations thanks to their collective clout. Some will offer the means to get extended medical and other benefits provided to their employees at a better rate thanks to the organization’s larger memberships being able to induce benefit companies to woo them. They’re also vessels of knowledge, providing online education, legal expertise, industry savvy and often masterminding conferences or bringing in one-off speakers.
Organize Your Business
Whether it’s getting involved with business associations socially and civilly, or it’s hiring a lawyer and tax expert to help you structure a business, getting organized should be a priority for every business owner.