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Classification of companies, with explanation and examples

Classification of companies, with explanation and examples

January 29, 2023

At present we live in times of frenetic (and complex) economic activity, where the major decisions and trends are marked by companies globally and locally to a lesser extent. The classification of companies is a way to organize and organize the commercial sector to establish a good financial development in modern societies. In the case of Spain, which is what interests us, the administrative framework is to a certain extent complex.

Thus, it is important to take into account the classification of existing companies in the legal-economic order, under the Ministry of Finance of the State, which is the competent body and public regulator of the Spanish economy. This is not a minor issue, because mismanagement or registration of the type of company we want to set up, can determine the future of it, which can lead us both to success and failure.

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What is a company?

A company is a productive unit formed by a number of people and / or shareholders with the ultimate objective of exploiting a given economic activity to the maximum . According to their nature, companies can take different forms that we will detail in the following points.

1. Classification of companies according to their legal form

Next, we will make a list of most common companies taking into account the legal form.

1.1. Autonomous Businessman

This type of company is exclusively individual. It does not have partners, it does not have an organizational structure other than the personal one . The individual decides, manages, organizes and determines the capital that can contribute to generate economic activity.

1.2. Sociedad Anónima (S.A.)

Probably this type of company is the most common nationwide. A public limited company is composed of a determined social capital, an amount agreed by the shareholders that comprise the company. The way in which the company is managed is through the election of a general manager or manager, chosen among the shareholders and renewable temporarily. The minimum capital to contribute is € 60,000 gross.

1.3. Limited Company (S.L.)

Within the classification of companies, societies take different forms. The limited company is designed to promote the creation of small and medium-sized companies, which is usually another of the most common forms of business formation. The minimum capital is € 3,000 gross, with a maximum of 5 partners.

1.4. Cooperative Society

Cooperative societies are especially common within the primary sector. That is, agriculture, fishing and livestock. The members adhere to the cooperative voluntarily, as well as unsubscribe in the same way. The main objective of this association is enhance the knowledge and resources of different companies to obtain a common objective / benefit . The capital to be contributed will be decided in the constitutional statutes of the company.

1.5. Civil society

This type of company is one of the most interesting in recent years. The sector most interested is the technical-legal. That is, professionals who are dedicated to the legal sector, builders, computer engineers and surveyors among others. In addition, almost 90% of small businesses opt for this modality as an association between freelancers and professionals from the same sector.

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2. According to the size of the company

This point turns out to be another fundamental pillar at the time of deciding the type of definitive company. Let's see the different classifications according to the size that is represented by the number of workers, mainly.

2.1. Micro companies

There are no more than ten workers on the workforce, including the founding person of the company. They can become organizations with potential if they invest in them, considering innovative ideas with a vision of the future. Here we find entrepreneurs and start-ups .

2.2. Small company

In the small company we have one of the most common models when it comes to forming an entity of this type. Of all the classifications, it is the most common. It usually has between 10 to 50 workers , family business or friends of great confidence that invest a capital of their own resources or savings. Bars, restaurants, fashion store, etc.

2.3. Medium-sized company

She is the mother of all those who make up this list. They enter the label of "PYMES", small and medium companies that make up a large part of the economy of any country. With a minimum of 60 workers and maximums that range between 300 and 400, they are solid structures with great economic success.

2.4. Big enterprises

Clearly it is the riskiest bet. Normally they have no less than 300 employees, a complex and structured organization, and their final objective is the product that is offered internationally. The luxury sector is a good example of what a great company is : jewelry, watchmaking, automotive sector, restaurant franchise, etc.

3. Classification of companies according to their capital

Finally, the origin of capital is a common resource for the classification of companies, which are basically 3 types. Let's see.

3.1. Private capital

All the investment and financial resources deposited, come from the effort that each individual at a particular level contributes to the constitution of the company. As is evident, Its objective is to achieve the maximum benefit with the capital invested .

3.2. Public capital

Contrary to what happens in the previous point, companies with public capital are subsidized by money (tax reimbursement) from state coffers to develop economic activities that aim to provide services to ordinary citizens. In this case, profitability is not sought or benefits are obtained.

3.3. Mixed capital

These types of companies are very common in the societies or countries of the so-called Welfare State model. The country in question intends to offer specific services to reach the maximum number of inhabitants possible. However, in some cases public investment is not enough and private entities are used to finance the project. The health sector (public hospitals) and the teaching (universities) are very much fed by this type of capital.

Bibliographic references:

  • Handy, C. (2005). Understanding Organizations. London: Penguin Books.
  • Morgenstern, J. (1998). Organizing from the Inside Out. Oxford: Owl Books.

Types Of Company Part 1 by Advocate Sanyog Vyas (January 2023).

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