Types of Companies Based on Their Forms and Activities

Did you know that there are different types of companies in Indonesia? The word company is certainly familiar to our ears. The company has covered all people’s lives. Starting from the goods around us that are produced by companies, the service assistance that we receive comes from a company, and we may also work for a company.

Judging from our daily life, the company has become a part of our life. However, do you actually know the meaning of the company? From what is seen in everyday life, you can know that the company is a workplace, which has a number of members in it. Usually companies produce goods or services, and have workplaces such as buildings, offices, shop houses, warehouses, factories, or plantations.

From this general understanding, we can define a company as a place where goods or services are produced and then sold to the public. The purpose of establishing a company is to gain profit or profit from producing something that can benefit many people. The benefits offered, namely through goods or services that are solutions to problems faced by society.

The company looks like an ordinary business. In the outline of the activities carried out by the company, this is true. The company can indeed be said as a trader. However, what distinguishes a company from an ordinary business is that there are laws that bind the company. A company is defined as a legal entity formed to carry on an industrial or commercial business.

For those of you who still have questions about the company, let’s see the explanation below until it’s finished. This article will discuss in more detail the definition of a company, the elements that make up a company, and the types of companies based on legal entities and the activities carried out.

Definition of Company

According to the Big Indonesian Dictionary, the definition of a company is an activity that is carried out in an orderly way or with equipment, with the aim of making a profit. The company is a place where goods or services are produced and then sold to the public. The company’s goal is to utilize human resources and natural resources, in order to produce goods or services, in order to create as much profit as possible. The company will produce goods or services that are able to be a solution to the problems faced by the community or are able to meet the needs of the community.

The company is also defined as an organization that is a legal entity, which conducts business or transactions. According to the book Company Law written by Handri Raharjo, initially the term company was referred to as a trader. However, along with the abolition of Articles 2 to 5 of the Commercial Code, the term trader was also removed and replaced with a company.

In addition to functioning to provide benefits for all parties involved in it, the company also functions to be the driving force of a country’s economy. The reason is, companies will utilize labor to produce goods or services so they can be sold to the public. According to Law Number 8 of 1997, a company is defined as any form of business that carries out activities continuously and permanently with the aim of obtaining profit, whether it is organized by individuals or business entities in the form of legal entities or non-legal entities, which are established and is in the territory of Indonesia.

In addition, based on Law Number 3 of 1982 concerning Compulsory Company Registration, a company is defined as a business entity established and operating within the territory of the Unitary State of the Republic of Indonesia (NKRI), which aims to generate profits. From the two definitions according to the law above, it can be concluded that a company is a legal entity formed by a number of people to run a commercial business or industrial business. A corporation can be regulated in many ways to meet tax objectives and financial obligations. This depends on the company law in the jurisdiction.

The company’s line of business will usually determine the business structure it chooses, such as ownership, partnership, or corporation. This structure also shows the ownership structure of the company. The company’s line of business can also be distinguished between public companies and private companies. The two companies differ in terms of regulation, ownership structure, and financial reporting requirements.

Each company is registered with the government and some are not registered. For companies registered with the government, the company will have a business entity for the company. Every business entity has a different meaning. This business entity stands according to the types of business.

See also  A Comprehensive Guide to Psychiatrists Careers

Company Forming Elements

Based on the understanding of the company described above, an organization can be called a company if it fulfills various elements, namely:

  1. There is a clear form of business; It is clear who owns the company, whether the company is a legal entity or not.
  2. Has the aim of seeking profit or profit.
  3. Carry out production activities that are carried out continuously and are permanent.
  4. All activities are carried out openly.

In setting up a company there are 2 very important main elements, which become a foundation for the establishment of a company. The first element is the form of business. Companies need to first determine the form of business to be created, whether the business form is an individual, PT, UKM, or CV. This form of business may change along with the development of the company.

The second element is the type of business. This type of business is more diverse. The company can freely determine what type of business it will run. For example, the company will be engaged in the culinary, health, plantation, or so on. The types of companies can be categorized according to the industry they run and the form of legal entity. The types of companies can also be distinguished based on capital ownership or based on the amount of business capital. Every business entity has a different meaning. These business entities are established according to their respective types of business.

Indonesia is a country that has various types of business entities that are recognized by the state. In the following, various types of companies will be explained based on the form of business entity and the types of companies based on the activities they carry out. Listen to the explanation until it’s finished, okay!

Types of Companies Based on the Form of Business Entity

In Indonesia, some companies are registered with the government and some are not. For registered companies, the company will have a business entity for the company. According to the book Company Law by Handri Raharjo, the types of companies in Indonesia that are commonly found in everyday life are as follows.

1. Limited Liability Company (PT)

Limited Liability Company (PT) is a business entity that is included in a legal entity. This means that a Limited Liability Company can have its own obligations (debt) and assets. To set up a PT, it takes at least 2 people who are required to have a notarial deed before registering and obtaining approval from the Ministry of Law and Human Rights. Limited Liability Companies have 3 types of capital, namely issued capital, authorized capital, and paid up capital. Limited Liability Companies also need to have a clear organizational structure, such as directors and commissioners.

2. State Enterprises

A state company is a type of company whose capital is owned by the state, either partially, wholly, or most of it. A state company is a company that has capital, either part or all of which is state wealth or property which has been separated from the State Revenue and Expenditure Budget (APBN). Based on Law Number 9 of 1969, state companies consist of Public Enterprises , Public Companies , and Departmental Agencies .

3. Persero

This type of company is almost the same as a limited liability company, but some of the shares are controlled by the state. However, state-owned companies do not receive facilities from the state. The status of state-owned company employees is also a private employee. In general, in Indonesia, a state-owned company is a company that has changed its status from Perum or Perjan. The change in status from a state company to a Persero will result in a focus on obtaining higher profits.

4. Limited Partnership (CV)

A limited partnership is a type of company built by two or more people, in which the members have different levels of involvement with one another. Limited partnerships usually consist of at least 2 people, one of whom has a role as an active partner or complementary partner, and the other is a passive partner or limited partner.

An active partner is a party that takes care of all the interests or business management of a limited partnership. Meanwhile, passive partners are parties who only invest capital. Active partner is the party responsible for the interests of CV. If the CV suffers a loss, then the active partner has the responsibility to bear all losses and pay off all of CV’s debts in any way possible, even sacrificing his personal assets.

5. Cooperative

Cooperative is a joint venture formed from an association of people. Cooperative is a type of company that is founded and operated by its own members. Cooperatives are democratic, which means one member has one vote (one man one vote), and all cooperative members have the same responsibility in managing the company.

Cooperatives were established with the aim of improving the welfare of their members. Therefore, being a member of a cooperative can provide many benefits for someone. One of the advantages, namely to increase income.

See also  difference between centripetal force and centrifugal force

6. Individual company

A sole proprietorship is a type of company whose capital is entirely owned by one entrepreneur. Sole proprietorships are also run by that one person. Individual companies carry out all their own business activities, or in other words, manage all production, marketing, financial affairs and other business activities alone. If there are a number of workers who help with their activities, then their status is only to help employers who are bound by a work agreement.

From this definition of a private company, we can see that someone who is the owner of this company has a very big responsibility. All responsibilities related to company activities are fully borne by the owner. This is because those who own all the capital, as well as those who make strategic decisions, are the owners.

7. Firm Fellowship

A partnership firm is a type of company established by two or more people to run a company under the same name. This firm partnership was founded with joint venture capital from several people. Each member in this firm has the same responsibility in managing the company.

Profits and losses will also be shared. A firm can be established officially or privately by simply making an agreement between all members of the firm. Partnership firms are divided into several types, namely general firms, limited firms, trade firms and service firms.

8. Civil Partnership (maatschap)

A civil partnership is a type of company established on the basis of an agreement between two or more people to get involved and enter into something, with the aim of sharing mutual benefits. Civil partnerships are a common form of firm partnerships and limited partnerships (CV).

So, that’s Sinaumed’s’ explanation of the types of companies based on the form of business entity. Furthermore, below, the types of companies will be explained based on the type of activity or industrial activity.

5 Types of Companies Based on Activities Performed

1. Manufacturing or Industrial Company

This type of company is a company engaged in the processing of raw materials into semi-finished goods or whole products, so that they can be sold to consumers. Manufacturing or industrial companies are companies whose revenues are generated from activities to process raw materials into a semi-finished product or a complete product that is ready for use. Industrial companies will have a cost of goods sold which is the benchmark in determining profit or loss in the sale of these products. Industrial companies have various production costs consisting of labor costs, raw material costs, transportation costs, and factory overhead costs.

2. Service Companies

A service company is a type of company that sells or provides services to the public or consumers, such as banks, transportation, accounting firms, insurance, and so on. Service companies have a number of characteristics, namely their income is derived from providing services, they do not have a calculation of the cost of sales of services, they provide services to the public or consumers, and profits or losses are obtained from the results of a comparison of the total revenue with the weight or service expenses incurred. given.

3. Trading Company

A trading company is a type of company whose main business is to buy goods and then resell them to consumers. A trading company has a number of characteristics, namely its main income is obtained from selling merchandise, does not change the goods purchased and directly resells the goods, its main costs are determined by the cost of goods sold, and profits are obtained from selling goods at a higher price of the original price when purchasing the item.

4. Agricultural Company

An agricultural company is a type of company engaged in the management of natural resources, for example plantation companies, agro-industrial companies, livestock companies and inland fishery companies. The characteristics of an agrarian company, namely its activities in managing natural resources, cultivating available natural resources, and obtaining profits from the management of these natural resources that produce products that can be sold to the public.

5. Extractive Companies

Extractive companies are types of companies whose activities directly take and utilize the results of natural resources such as fishing in the high seas, mining companies, extracting seaweed, legal logging, and so on. The characteristics of extractive companies, namely directly taking objects or goods that have been available in nature from the start and making the results of these natural assets or goods for further use or sale.

This is an explanation of the meaning of a company, the elements that make up a company, and the types of companies based on the form of business entity and based on the types of activities they carry out. Does Sinaumed’s know more about the company? If you still want to deepen and broaden your knowledge about the company, Sinaumed’s can get information by reading books about companies that can be found at sinaumedia.com. As #FriendsWithoutLimits, sinaumedia always tries to provide the best and most complete information for you.