Similarities and Differences between Social and Business Enterprise

SOCIAL AND BUSINESS ENTERPRISES
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Part A
Distinguish between Social Enterprise and Business Enterprise
A social enterprise refers to an organization with specific social goals that serve its main purpose. The organization puts the interest of people and the environment before the shareholder. The main aim of social enterprises is to generate revenue while promoting the community and the surrounding. Also, the enterprises’ revenue is mainly used to promote social programs. The social enterprise concept was created in the United Kingdom during the 1970s to oppose the standard commercial enterprise (Barone, 2020). The idea seeks to balance operations that offer financial rewards with social objectives like housing for needy people or job training. Funding is acquired by selling products and services to customers, while other funds come from grants. Social enterprise operations are different from standard company operations since profit maximization is not the main aim. However, revenue from social enterprises plays a crucial role in ensuring venture sustainability. Social enterprises are differentiated from traditional charity that depends on outside funding to execute their activities by sustainable revenue (SEUK, 2019). However, the goal does not imply that social enterprises cannot profit. Instead, it states that their preference is to reinvest in social missions instead of distributing the funds to shareholders.
On the other hand, a business enterprise provides goods and services to make profits. The term applies to any organization whose main objective is income generation through selling products and services. Also, business enterprise refers to the ability of an individual to identify a business opportunity and create a business. Business enterprises are large corporations and any profit-generating activities that sell to customers. For instance, a person who sets up a roadside lemonade stand with the objective of gaining profits from the activity is considered an enterprise operator (Woodward, 2019). The same scenario applies to a person running a small bookshop to profit. Organizations providing services such as companies providing telecommunications services and institutions providing outsourcing and courier services are also categorized as business enterprises.
Business enterprises must obtain licenses to operate within a specific local community. Licenses are mandatory requirements for every commercial enterprise to create a business location for customers to buy goods and services freely. Also, the enterprise must possess a business license if their operations include sales of offices in the region or other revenue-generating activities (Woodward, 2019). While setting up a business enterprise, contacting municipal officials to enquire about the compliance required for running a business in a certain region is crucial since rules relating to business operations vary from one administration to another.
Social enterprises are classified into four categories even though they continuously grow and might change due to new areas. Each social enterprise category operates by integrating profit maximization and attaining social objectives. The types include trading ventures, financial bodies, community organizations, and non-governmental organizations (Barone, 2020). Trading enterprises are cooperatives and other institutions that employees own. The enterprises differ in size and structure, although their ownership framework permits economic flexibility compared to different enterprises.
Various financial institutions, including cooperative banks and credit unions, fall under social enterprises. For instance, the trade union’s structure allows individuals to automatically become owners after depositing money with the institution as customers while the deposited funds help other people. The unions provide high saving rates and poor interest rates and are less focused on profit-making. Its main focus is helping its members. On the flip side, cooperative banks accept deposits and offer loans to customers, but ownership belongs to customers. However, the institutions are sometimes blamed for violating their principles and providing non-members with their services since most are traded in the public stock exchange (CFI, 2015). Also, they generate income for the public stock market, thus raising the concern of a different group of shareholders competing with cooperative members in controlling the bank.
Community organizations are community centers, smaller shops, housing cooperatives, and sports clubs. These are institutions created for a specific purpose and operate to reinvest the profits back into society. The community dental service is an example of a community organization serving as a social enterprise. The organization is an employee-owned social enterprise that provides dental and oral health services in multiple areas of the United Kingdom. The enterprise provides services through 56 clinics located in different parts of the nation and has a 98% patient satisfaction rate (CDS, 2022). Community dental services combine a public service attitude with business innovation and vitality to create a vision and a belief that the best form of achieving social aims is a well-run, aggressive, and profitable enterprise. The organization generates its income by providing dental care and promoting oral health. Services provided by the institution are usually commissioned by NHS England and municipalities to provide NHS dental services and promote oral health to a huge population (CFI, 2015). Lastly, NGOs and charities seek to support a specific political, social, or environmental objective. The profits acquired improve the social or environmental status of the enterprise or remunerate individuals providing free services to certain groups of people.
On the other hand, business enterprises are classified into four categories: sole proprietorship, corporations, partnership, and limited liability companies. Entrepreneurs should consider the best business structure before starting business operations. A sole proprietorship refers to an independent business owned by one person. The business structure is the most simple business structure and easy to form. However, it has limited financial and legal protection for the owners. The business owner shares the identity with the business and is fully liable for the business liabilities (Twin, 2020). Establishing a sole proprietorship is an easy and inexpensive procedure, and the enterprise is taxed once. Lastly, sole proprietorship requires few regulations to start.
On the other hand, a partnership refers to enterprises owned by two or people called partners. Like sole proprietorships, partnerships take advantage of taxation where the partners treat the income generated as the owner’s income for single taxation. Partners are liable for the liabilities of the partnership. Partnerships are categorized into three groups known as general, limited, and limited liability partnerships (Gov, 2021). General partnerships are the cheapest form of partnership to form due to the low upkeep costs associated with the partnerships. Each partner in a general partnership participates in the business activities has unlimited liability. As a result, personal assets can settle the liabilities of the business. For instance, if John and Paul are in a general partnership and Paul gets sued for misconduct, John’s assets can be claimed in the lawsuit. Limited partnership refers to a partnership with a minimum of one general partner. The general partner has unlimited liability and manages the business operations. Also, the partnership contains limited partners with much liability, like their financial positions in the enterprise (Gov, 2021). The limited partners are not involved in management activities and lack direct control in the enterprise. Lastly, limited liability partnerships (LLP) are partnerships where each partner is responsible for the business operation. However, the partners are not liable for the actions of any partner or the organization’s debts.
The limited liability company (LLC) is an enterprise that blends the features of a partnership and corporations. They are among the most flexible business models in the industry. LLC enjoys the tax benefits of sole proprietorships and portrays corporations’ limited liability (Kenton, 2020). LLCs can select between multiple tax treatments provided the enterprises do not choose to remain a C corporation. Also, LLCs enjoy limited liability for members. The company has a separate legal entity that protects individuals from being held liable for the operations and liabilities of the company.
Lastly, corporations refer to business enterprises created by shareholders with a separate legal entity. As such, owners are protected from the liabilities and legal issues of the company. However, forming a corporation is more complicated than other business enterprises. It requires creating an association article containing information such as the name and location of the company, issued shares, bus...