Business: Definition

The term » Commercial activity It is commonly used in the business world and commercial law, but it is often misunderstood.

In this article, we will define this essential concept and explore its importance for entrepreneurs and investors.

The different categories of activities, the associated legal aspects and the practical advice for those who foresee acquire or from sell AND Commercial activity.

What is a business?

Designates all the elements that allow a company to operate and generate income.

These are not only material goods, but also intangible elements that contribute to commercial activity.

In France, the legal definition of the company is given by The commercial code.

This definition highlights the complexity and diversity of the elements that make up a company.

The components of the business

Generally it consists of several elements, which can be classified into two main categories:

Body and immaterial elements.

1. Corporal elements : These are material goods such as rooms, machines, furniture and equipment used for the functioning of the company. For example, in a bakery, ovens, work tables and delivery trucks are body elements.
2. Intangible elements : Include customers, the right to rental, commercial name, brand and all the administrative authorizations necessary for the exploitation of the activity. Customers, in particular, are often considered the heart of the business. A well consolidated company with a base of faithful customer can have a considerable value, depending on its material activities.

Types of activities

There are different types of activities, each with its own peculiarities:

• The retail sales activity : This type of background affects local shops and shops, where retail sale is the main activity.
• The activity of services : This type includes companies that provide services, such as hairdresser salons, travel agencies or restaurants.
• The industrial business : This fund brings together production and production companies, where the transformation of raw materials into finished products is central activity.
• The online business : With the development of electronic commerce, the online business has become increasingly popular. They include sales sites, online service platforms and mobile applications.

Why is the company important?

It is essential for several reasons:

• Economic value : When an entrepreneur wants to sell his activity, his value is often the main criterion taken into consideration. A well consolidated activity, with a faithful clientele and a good reputation, can apply the quantity of material activities several times. Investors are often ready to pay a high price for a company that has a potential of profitability.
• Corporate transmission : For entrepreneurs who want to sell their business, the company represents an important resource. Good customers and a solid reputation can facilitate sale. In addition, the transmission can be an important step for heirs or partners who wish to continue the activity.
• Legal protection : The activity benefits from legal protection as a separate entity. This means that resources cannot enter the company elements to solve the entrepreneur’s personal debts. This legal protection is essential to guarantee the sustainability of the company and the financial safety of its owner.

The legal aspects of the company

Its management also involves significant legal considerations.

When buying or selling, it is essential to take into account the following:

• The sales contract : This document must be written with care, detailed the elements included in the business, the sale price and payment methods. It is often advisable to invoke a lawyer specialized in commercial law to ensure that the contract complies with the legislation in force.
• Administrative authorizations : Some activities are mandatory for licenses or specific permits. It is essential to verify that all authorizations are in order before finalizing the transaction.
• Tax bonds : The sale of a company can have tax implications. It is advisable to consult a rented accountant to evaluate the tax consequences of the transaction.