Potential investors in entrepreneurial enterprises place significance on the ability of the management team to enact change in receptive markets as to earn a multiple of their original investment. It is the ability of the management team to generate confidence that they can deliver results that makes the difference to investors. They must be able to demonstrate their ability to deploy people to execute processes that deliver products and/or services to large markets.

Potential investors will more readily finance an entrepreneurial enterprise on the basis of the strength of its management team, and when the market is large, ready and aware of its products and/or services, than the underlying benefits and features of the products and/or services themselves.

A successful management team may be able to repeat their successes as serial entrepreneurs by knowing how to entertain, inform, convince, persuade, and negotiate with people, and manage processes.

The management team must be able to demonstrate that they can enact change, both by being able to cause it or respond to it depending upon opportunities and conditions (especially crises). Causing change affects competitors, but being able to respond to change caused by competitors is essential to sustainability also.

The acceptance of new products and/or services in existing markets, or existing products and/or services in new markets is based upon employee, customer, and even supplier constituencies being willing to change their behaviors.

Hence management must play the leadership role in order to establish an environment that motivates specific constituents to change. This means being able to communicate both aspirational and inspirational messages that cause others to change their behaviors to adopt a product and/or service, either de novo or as a substitute. Such change occurs by understanding the difference between what people need and what they want, and creating emotional messages that cause them to act with urgency.

Therefore, a management team seeking financing is likely to lose their investor audience if they focus solely on presenting a products and/or service. This rule generally applies even if the value propositions offer strong benefits and features.

Effective leadership and management techniques are enterpriship (entrepreneurship, leadership, and management) competencies.

The managerial role is about process planning, execution, and control. The role is performed by any individual who has to achieve results, not necessarily just appointed executives and managers.

The managerial role is essential for earning the value inherent in innovative ideas. It applies the notion of planning, execution, and control to both project-oriented and perpetually-oriented activities. Planning involves organizing activities and resources; control involves reporting and evaluating status, and making adjustments accordingly.

Research and development activities are project-oriented with a finite beginning and end. Sales and production activities are either perpetually-oriented or project-oriented depending upon the nature of the products and/or services offered.

Mass manufacturing work is perpetually-oriented enabling large volumes of products to be delivered from a single design. Orders may repeat indefinitely provided that the market doesn’t tire. Custom manufacturing work is project-oriented requiring a product to be built to order from a unique or tailored design. Through the use of computer-aided design and manufacturing, it is possible to achieve a hybrid of mass manufacturing with custom design.

Within the context of planning and policy development, deployment, and performance measurement activities, the managerial role comprises organization, execution, evaluation, and adjustment.

Organization:

• Confirming scope, objectives and goals (budget, schedule and quality standards)
  
  
• Assigning people to tasks
  
  
• Securing facilities and equipment, materials and supplies
  
  
• Training

Execution:

• Communicating to the team, and to sponsors
  
  
• Assigning and accomplishing tasks
  
  
• Solving problems
  
  
• Handling exceptions

Evaluation:

• Monitoring the earned value in terms of scope, objectives, budget, schedule, and quality
  
  
• Assessing the people
  
  
• Assessing the facilities and equipment, materials and supplies

Adjustment:

• Tuning (scope, objectives, budget, schedule, quality, resources)
  
  
• Taking corrective actions for future performance

Work is organized in terms of:

• What is to be accomplished and why (scope, objectives and goals)?
  
  
• How it is to be accomplished (resources and work units)?
  
  
• When it is to be accomplished (schedule)?

As tasks are executed, progress is evaluated periodically in terms of variances from:

• Budget
  
  
• Schedule
  
  
• Quality
  
  
• Resources (people, materials, supplies, facilities, and equipment)

Adjustments in plans must be made as necessary until the results are delivered, the work is rescoped, or canceled.

The managerial role benefits from the use of both operational and analytical systems for people, products and/or services, processes, and project management that deliver both financial and non-financial information for performance measurement activities.

The managerial role applies resources to activities to achieve results and earn value in conjunction with the entrepreneurial and leadership roles. The managerial role is an enterpriship (entrepreneurship, leadership, and management) competency.

The leadership role is about influencing people through aspirational, inspirational, and motivational communications. This role is equally applicable to top-level executives, team leaders within functions, or any individual in between.

The leadership role provides direction through values, mission, vision and teamwork to transform innovative ideas into value.

The role enables either formal or informal agreements between leaders and followers to be reached, including employees, customers, suppliers, and investors. If the vision is compelling enough, members of all constituencies will follow, including regulators and competitors.

When agreements are negotiated, there is a clearer understanding of direction and what is both required and expected. Both parties may have to make trade-offs to reach a negotiated agreement. Agreements affect culture and morale. Culture results from knowledge and skills learned from leaders and role models that determine shared values, attitudes, behaviors, and beliefs. Culture influences future behaviors. Morale is the willingness to maintain beliefs in values, mission, and vision.

The leadership role is performed at two levels:

• Macro level – transformational: enacting change in the environment within which the enterprise operates, or within the enterprise itself, or both
  
  
• Micro level – transactional: the relationship between a leader and a follower in task accomplishment

Transformational leaders influence results from followers, as individuals and in teams, by changing their aspirations, wants and needs, objectives and goals, and by affirming shared values, mission, vision and learning.

Transactional leaders are either power-centric or empowering. Power-centric leaders use a command and control oriented approach, where results are delivered to order with rewards, or else punishments are inflicted. By contrast, empowering leaders develop successors through a process of migrating from a directive style to a supportive style based upon the commitment and competence of followers. An enterprise cannot grow unless it develops future leaders.

The leadership role is performed within the context of planning and policy development, deployment, and performance measurement activities. It comprises self-motivation, aspirational leadership, inspirational leadership, and establishing an environment for motivating others.

Self-motivation – developing enthusiasm for an innovative idea and/or commitment to values:

• Positive attitude
  
  
• Ambition
  
  
• Confidence
  
  
• Commitment
  
  
• Self assessment

Aspirational leadership – establishing the mindset for communications:

• Values and guiding principles
  
  
• Mission
  
  
• Vision
  
  
• Value proposition

Inspirational leadership – communicating to and building relationships with followers:

• Attracting and acquiring
  
  
• Expanding
  
  
• Maintaining
  
  
• Retaining
  
  
• Focusing
  
  

Establishing an environment for motivating others:

• Influencing the motion to action
  
  
• Enabling followers to motivate themselves

The consequence of effective leadership is that followers achieve the intended results through their own self-motivation.

The leadership role sets direction that others will follow to achieve results in conjunction with the entrepreneurial and managerial roles. The leadership role is an enterpriship (entrepreneurship, leadership, and management) competency.

The entrepreneurial role is essential to developing new products and/or services and processes, and improving existing ones, in both entrepreneurial and institutional enterprises. The role applies to entrepreneurs and intrapreneurs who enact change. It also applies to those individuals in planning and research and development capacities, and to others who can offer suggestions that earn and add value. The role applies throughout the life of an enterprise, and has both strategic and tactical applications.

The entrepreneurial role is about delivering value to both internal and external customers, and architecting the infrastructure through which it is earned and added. The role is essential in both new business development and continuous improvement activities, which include increasing efficiency and effectiveness, and reducing costs and expenses. The role should be actively encouraged throughout the enterprise so to keep it innovative, and both able to cause and respond to change.

The entrepreneurial role is performed within the context of planning and policy development, deployment, and performance measurement activities. Innovation can occur when change opportunities are identified in such areas as:

• New markets or changes in market demographics and psychographics
  
  
• New technologies that will enable new products and/or services
  
  
• Regulatory changes
  
  
• Offensive or defensive moves of competitors

In reality, breakthrough ideas can arise at any time by an entrepreneur who starts an enterprise, or from any individual within. Ideas arise in research and development activities, and through employee suggestion programs or similar activities. Ideas may be disruptive if plans and programs are already in place. However, the implementation of strategic ideas cannot be ignored until the next planning cycle, and must be addressed on a timely basis. In order to do so, a “hi-spot” review project should be conducted as soon as possible, on an “ad-hoc” basis, to determine the scope and impact of ideas on current plans and programs.

Strategic ideas result from higher order effects that enhance existing products and/or services or processes. New products and/or services may result from earlier successes. Rebranding may increase attractiveness of existing products and/or services in selected markets. Tactical ideas may involve small refinements to existing functions and features that can nevertheless make a difference, such as adding a product line extension or model variations.

Innovation is just as important in process development as it is product and/or service development. Strategically, technologies such as computer aided design and manufacturing can make a major difference to process planning, execution, and control. Tactically, the notion of incorporating simple procedures to upsell and cross-sell products and/or services at the point of sale, or changing product displays, can earn extra sales revenue with almost no additional effort.

Before large investments in market, product and/or service, and infrastructure development are made, ideas should be prototyped on a proof of concept basis so as to gain feedback from the marketplace at large and potential users. However, once the idea shows promise, proper planning is necessary to bring an idea to market, or to incorporate it within the infrastructure with the anticipated scale effects.

The entrepreneurial role comprises:

• Development of idea into a product and/or service or process that earns and adds value
  
  
• Adaption based upon feedback from users in the marketplace (both internal and external)
  
  
• Enhancement of the idea over time
  
  
• Maintenance of the idea over time

Adaption comprises:

• Tuning the product and/or service or process to make it more effective and efficient
  
  
• Standardizing the product and/or service or process
  
  
• Integrating the product and/or service or process into the overall strategy and structure of the enterprise
  
  

The creation of innovative ideas involves investments in natural, human, intellectual, and financial capital. If intellectual capital is developed, it must be protected.

The entrepreneurial role transforms innovative ideas into value in conjunction with the leadership and managerial roles. The entrepreneurial role is an enterpriship (entrepreneurial, leadership, and management) competency.

Intrapreneurship is a competency required to foster a culture of change within an enterprise so as to build sustainable advantage over time. The practice applies to developing and launching new products and/or services within established enterprises. It applies also to entering new markets, and building new or reengineering existing infrastructures.

An intrapreneur is an agent of change within an enterprise who takes risk to transform an innovative idea into value. Intrapreneurs are found in institutional enterprises and are the equivalent of entrepreneurs in entrepreneurial enterprises. Intrapreneurs can be appointed by management, but often emerge from within based upon a perceived need for change.

An entrepreneurial enterprise is not yet established as an ongoing concern; an institutional enterprise is established – the term refers to small, medium and large enterprises.

Entrepreneurial enterprises migrate through three broad waypoints: transforming an innovative idea into a product and/or service (as a venture); transforming a product and/or service into an entrepreneurial enterprise; and transforming an entrepreneurial enterprise into an institutional enterprise.

Institutional enterprises migrate through three broad waypoints iteratively: transforming an innovative idea into a product and/or service; integrating the product and/or service into the enterprise; and building sustainable advantage. Sustainable means being able to continue over time, either by developing, enhancing, or maintaining the current state, or by changing it. Advantage means favorable, superior, and beneficial.

For example, Microsoft is an institutionalized provider of office application and operating system software, but began as an entrepreneurial enterprise offering a BASIC programming language interpreter. The General Electric Company, one of the largest enterprises in the world, has its roots in Thomas Edison’s laboratory.

Institutional enterprises must either innovate internally through the practice of intrapreneurship, or acquire entrepreneurial enterprises in order to survive. Entrepreneurial enterprises and intrapreneurial institutional enterprises usually have well-developed research and development capabilities; otherwise innovation has to be acquired from external sources in order for an institutional enterprise to remain competitive.

For example, even though IBM Corporation is an innovative institutional enterprise in its own right, it acquired Lotus Development Corporation in order to strengthen its position in client/server and collaborative software markets.

For example, Digital Equipment Corporation was an innovator of minicomputer products, but as it institutionalized, it struggled in the personal computer market. It was acquired by Compaq Computer Corporation, who in turn merged with The Hewlett-Packard Company.

The practice of intrapreneurship can result in the incubation of entrepreneurial enterprises, which can be spun of as either entrepreneurial or institutional enterprises. For example, Medco Health Solutions, Inc. is an institutional spin-off from Merck & Co., Inc.

Change is often unwelcome and unpopular. Change management can be highly controversial – the consequential internal politics can be highly risky for intrapreneurs.

Whereas new product and/or service ideas, and new market entry and infrastructure initiatives often originate in strategic planning exercises, new ideas come frequently from the “front-line.” The front-line is the listening post to the marketplace, especially to customers, suppliers and employees at competitors. However, sometimes these ideas conflict with the views of the vested interests – often the middle-management layer. As a consequence, some intrapreneurs have to initiate change from the “grassroots” instead of in the “blue skies.” Reengineering initiatives are usually very unpopular because when processes are redesigned, unnecessary activities are eliminated.

Intrapreneurs have to find internal sponsors for their ideas and initiatives who have political clout just like entrepreneurs have to find investors. In fact, even initiatives that were previously approved by top management can lose momentum over time, and be subject to cancellation.

Just like entrepreneurs, many intrapreneurs move on before their ideas are fully implemented (if at all) because they don’t have the patience for the long time frames required to enact change in institutional enterprises. The enterpriship competencies of entrepreneurship, leadership, and management apply equally to intrapreneurs as they do to entrepreneurs.

Stewardship is the discipline of administering the affairs and assets of others. Religious institutions apply the concept to those who administer their finances. The concept has been extended to the notion of household servants taking care of residents, and crews taking care of passengers on planes, ships, and trains. The stewardship discipline applies to enterprises also.

An enterprise is a group of activities intended to produce income organized as a business for profit, as a not-for-profit association, and even as a government agency.

This discussion is about stewardship in enterprises organized as businesses. However the same principles apply to not-for profit associations and to government agencies.

When organized for profit as corporations, partnerships, or limited liability companies, enterprises have shareholder, partner, or member investors. Investors delegate responsibility to a management team for directing and controlling the activities. The investors elect a board, who in turn appoint the officers, who in turn hire and retain other employees to enact the values, and to achieve the mission and vision.

The stewards of an enterprise include management (board of directors, officers, and non-official managers) and associates (supervisors and staff). Collectively they administer affairs and protect assets. As stewards, unincorporated sole proprietors should separate their personal assets from those being used in their enterprises.

Every employee of the enterprise is a steward if they share its values, mission, and vision. An employee who sits on the side lines, does nothing constructively, speaks negatively, delivers poor service, or is otherwise uncommitted, is not a steward. Such individuals should seek opportunities elsewhere because only stewards can be trusted as custodians of the enterprise.

The stewardship discipline is about the effective application of the individual competencies of the stewards to the benefit of the enterprise and its constituencies. Competencies consist of knowledge and skills in personal, professional/technical, and enterpriship disciplines. Enterpriship embraces entrepreneurship, leadership, and management disciplines. The discipline applies to owner-managed enterprises also because there is a mutual responsibility between any enterprise and its constituencies to perform and to deliver value to all concerned.

Constituencies include employees, customers, suppliers, investors, regulators, and competitors. Employees are owed fair compensation and a safe environment in exchange for loyalty and productivity. Customers are owed quality and value in exchange for loyalty and timely payments. Suppliers are owed loyalty and timely payments in exchange for quality and value. Investors are owed returns above the cost of capital in exchange for commitment. Regulators are owed compliance in exchange for freedom to do business within laws and regulations. Competitors are owed challenges in exchange for fairness.

For sole practitioners the burden is high because of the breadth and depth of proficiency required to operate in regulated and competitive environments – even sole practitioners have to delegate sooner or later if their enterprises are to build momentum.

Stewardship competencies have three components: enabling, domain, and core.

Enabling competencies depend upon the entrepreneurial, leadership and managerial roles played not only by management, but by every steward in the enterprise. Enabling competencies drive efforts to realize opportunities.

The entrepreneurial role – both a process-oriented and a product-oriented role – is that through which stewards turn innovative ideas into value for the enterprise and its constituencies. Stewards must exercise this role at every stage of an enterprise’s development, not just the early stages.

The leadership role – a people-oriented role – is that through which stewards set the direction that others will follow to achieve results. The role is applicable to top-level executives and team leaders on the front-line, or anywhere in between.

The managerial role – a process-oriented role – is that through which stewards apply resources to activities to achieve results.

The enabling competencies of enterprises are based upon the enterpriship competencies of the individual stewards collectively. There is a mutual responsibility among all stewards to ensure that individual competencies of all concerned are being used beneficially.

Stewards often assume two or even all three roles. A steward’s ability to multitask is critical to the enterprise’s agility, and increases the value of their contribution.

For example, an individual may play the entrepreneurial role by introducing an innovative idea, act as a leader by influencing others to adopt the idea, and leverage managerial skills to obtain positive results from the implementation of the idea. Entrepreneurial skills are essential at any stage of development, not just the emerging stage.

For example, an employee on the front line in a retail establishment can play the entrepreneurial role by upselling or cross-selling other products and/or services, and by asking customers for suggestions; play the leadership role by showing other employees how to better serve customers; and play the managerial role by using time, materials, and supplies efficiently and effectively, such as by reducing waste, recycling, and eliminating redundancy.

Domain competencies represent the specific functional knowledge and technical skills that are required to perform an activity. Domain competencies are found within subject areas such as legal, finance, human resources, information technology, program management, engineering, operations, marketing, and sales.

Core competencies are activities done well that can give the enterprise a competitive advantage.

When stewards work together in teams, synergistic effects can fill gaps in the competencies of individuals. Collectively they determine how competencies can be applied beneficially, and which activities give the best advantage.

Constituents make commitments to an enterprise when they are confident that it can perform and deliver value – employees devote careers, customers are loyal, suppliers advance credit, and investors source capital.

The key success factor of stewardship is to ensure that the enterpriship competencies of individual stewards be transformed into the enabling competencies of the enterprise to deliver value.

The terms corporation, enterprise, company, and business are often used interchangeably; however, they have distinct meanings. In law, only individuals as natural persons and corporations are legal entities. A juristic person is a group of natural persons behaving as if they are a single group as a partnership, limited liability company, or corporation, and can exist for many reasons. An enterprise is either a sole proprietorship associated with a natural person, or a juristic person. A business can exist to earn revenue from customers in order to generate a profit for its owners regardless of legal form.

A corporation is a legal entity that is separate and distinct from its owners. In the United States, corporations are organized under state law according to articles of incorporation. However, both the Federal and state governments may form corporations for commercial and governmental activities. Federally chartered banks are designated as national associations or national trust and savings associations. According to law, there must be some indication in the name of the corporation that it is incorporated. For example, “The Business Leadership Development Corporation” and “Javazona Cafes, Incorporated” (abbreviated to “Javazona Cafes, Inc.”) are two incorporated legal entities.

An enterprise is a group of activities intended to produce income for profit as a business, as a not-for-profit association, or as a government agency. An enterprise can consist of one or more legal entities.

In its simplest form, a company is a group of individuals who are associates or companions, as opposed to a group of individuals assembled with no distinct purpose. A team is a tightly coupled group working coherently with mutual accountability. In effect, a company is set of teams working together with common purpose.

The term “company” is used in the theatrical profession to describe a group of actors with their accompanying equipment. The term is also used to describe a group of individuals operating a business as employees and owners as juristic persons, regardless of legal form. In the United States, the term “company” can be associated with partnerships, limited liability companies, and corporations. A limited liability company that has a single owner is “disregarded” by the Internal Revenue Service if the owner elects that the entity be taxed as a sole proprietorship. However, in some states and countries, the term “company” is synonymous with “corporation” – meaning that it has a legal form separate from its owners. Hence, “American Express Company” and “Ford Motor Company” are corporations. In some countries, the term “associates (and company)” is synonymous with “partnership,” and “anonymous society” is synonymous with “corporation.”

The earliest forms of companies were unincorporated associations, followed later by partnerships. Individual corporations were initially established by governmental charter. However, the concept of a joint stock company was created over time, which had individual owners with unlimited liability. A joint stock company was similar to a partnership, but had certain rights distinct from the individual owners. A modern corporation is in effect a joint stock company with limited liability of the individual owners.

A tradename is often used to establish a brand separate from the legal name of a sole proprietorship, partnership, limited liability company, or corporation. For example, “BLD” is a tradename of The Business Leadership Development Corporation; “Achieve Plan B” and “Vitaprise” are tradenames of Nigel A.L. Brooks. Tradenames are common in franchise and licensee systems, where different legal entities are part of the same system, and thus share a common identity, such as Enterprise Rent-A-Truck, Holiday Inn, McDonald’s, and Subway. The tradename is owned by the franchisor or licensor, but can be used by the franchisees and licensees. However, whenever business is done in a name other than a legal name, it is fictitious and must be registered as a certified “doing business name” in whatever jurisdictions are required under state law. For example, if Nigel A.L. Brooks is doing business as “Vitaprise,” that name must be registered as fictitious in each jurisdiction where it is used.

A business is formed to earn a profit from revenues from commissions, dividends, fees, interest, rents, royalties, and sales less expenses from costs of revenue and operating items, and capital gains from investments. An entity such as a sole proprietorship, partnership, limited liability company, or corporation may be formed, organized, or incorporated for the purpose of conducting business before revenue is earned. As such the entity is separate from but related to the business enterprise. A venture is a start-up or early stage enterprise (as opposed to a hobby), which may be classified as a “development stage entity” because it has little or no income. Its future may be uncertain until the business concept has been proven.

The business becomes established when there is a commitment from the owners to earning revenue as an ongoing concern, and predictable patterns among the constituencies start to appear. Thus a business enterprise can be established much later than when the holding entity for it was formed. The entity can be changed as conditions dictate, without changing the nature of the business enterprise. For example, the initial business entity may be a limited liability company organized in Arizona, but later changed to a corporation incorporated in Delaware. Assets of the enterprise and associated revenue streams can be sold separately from the entity, or the entire entity itself can be sold. Similarly, assets and revenue streams, and entire entities can be acquired.

Regardless of the marketing efforts of the management of an enterprise and its legal form, its fate is ultimately determined by the frequency, recency, location, and value of the transactions of its customers based upon their needs and wants. Such transactions are in turn are influenced by the behaviors of employees, regulators, competitors, and market trends in general.

Operating enterprises is an enterpriship (entrepreneurship, leadership, and management) competency.

The word “enterprise” means “undertake for a prize or cause.” An enterprise is a group of activities organized as a business for profit, as a not-for-profit association, or as a government agency, and comprises one or more entities. An entity is formed, organized, and operated under Federal and/or state laws, which may permit or deny certain activities. Operators of enterprises have to be aware of those entities that are suitable to their situation.

Enterprises…

Entrepreneurs transform ideas into products and/or services or causes through activities that may ultimately become enterprises. Under Federal and/or state laws, these activities must be conducted through appropriate legal vehicles. A legal vehicle is the type of entity for a specific situation based upon purpose, location of property (situs), and physical presence (nexus). The choice of legal vehicle and nexus determines the protections that are available for assets and the methods of taxation or exemption from taxes.

Associations, organizations, businesses, and not-for-profits…

An association represents a group of individuals who have voluntarily formed an organization to achieve a certain purpose. An organization is a generic term for an enterprise, entity, or a component thereof.

A business is an occupation, profession, or trade delivering products and/or services for an intended profit. “Not-for-profit” is a general term; “non-profit” entities include those that are exempt from certain taxes under the Internal Revenue Code and state laws. Non-profits are associations that are either unincorporated or incorporated, or trust funds and foundations. Their activities address agricultural, arts and entertainment, educational, health care, labor, religious, social, scientific, sports, or other charitable causes. Government agencies exist at Federal, state, county, and municipal levels.

An organizational unit is a component of an enterprise, such as a division, department, branch, plant, product line, business line, or business unit. Organizational units can exist within or across entities.

Entities…

A legal entity exists either as an individual or a corporation; a business entity has an accounting and tax reporting structure. A legal (juristic) person is either an individual natural person, or an entity as a group of natural persons behaving collectively as if they were a single individual. An entity is domiciled in the jurisdiction where it is organized or incorporated, or lives permanently if a natural person. If an entity has nexus in multiple jurisdictions, then it is subject to both domestic laws and foreign for local transactions, including taxation. All jurisdictions have licensing requirements for certain activities, and may have to grant authority to transact business before operations can begin locally.

For example, an entity incorporated in Arizona is considered to be foreign in California; an entity incorporated in the United Kingdom is considered to be foreign in both Arizona and California.

Sole proprietorship:

• Simplest business structure
  
  
• Unincorporated business owned by one individual proprietor
  
  
• Proprietor liable for obligations
  
  
• Files schedule C or F on the individual proprietor’s “1040” tax return

Partnership:

• Formed by an agreement as a general partnership between two or more persons (active partners), or as a limited partnership (one or more passive partners and one or more active general partners) – includes joint ventures and syndicates
  
  
• General partners are liable for obligations
  
  
• Files “1065” tax return; tax liability is passed to individual partners via schedule K-1
  
  
• If a husband and wife operate an unincorporated business, then it is treated a partnership – however, they may be able to elect for treatment as a qualified joint venture if there are no other partners and if they are both active – this election creates two sole proprietorships on an individual joint tax return

For profit corporation:

• Formed by articles of incorporation
  
  
• Owned by persons who are shareholders, who elect directors, who in turn appoint officers
  
  
• Legal entity separate from its shareholders with its own bylaws
  
  
• Liable for its obligations separate from the shareholders, directors, and officers
  
  
• Files “1120” tax return and is either taxed on income in its own right with dividends taxed on the shareholders’ returns (C corporation), or as a pass-through where the entire income tax liability is passed to shareholders via schedule K-1 (S corporation)
  
  
• As a “professional” corporation, activities may be restricted to licensed professions

Limited liability company:

• Formed by articles of organization
  
  
• Owned by one or multiple persons under an operating agreement, who are members and in turn may appoint managers if not member managed
  
  
• Liable for its obligations separate from the members and managers
  
  
• If it comprises multiple members, files a tax return and elects to be treated as either a partnership or a corporation; if it comprises a single member only, then it may file a tax return as a corporation, or be disregarded and treated as either a division of a corporation or a sole proprietorship

Limited liability partnership:

• Formed as either a general limited liability partnership or limited liability limited partnership by two or more persons
  
  
• Activities may be restricted to certain licensed professions
  
  
• Qualifies for limited liability status with the approval of its partners
  
  
• Liable for its obligations separate from the partners
  
  
• Files “1065” tax return; tax liability is passed to individual partners via schedule K-1

Unincorporated association:

• Formed by a group of individuals by a charter or agreement, whether organized for profit or not
  
  
• May have to file its charter or agreement with a government agency in the local jurisdiction
  
  
• May obtain tax exempt status if organized for not-for-profit activities
  

Non-profit corporation with tax-exempt status:

• Formed by articles of incorporation or organization
  
  
• Organized by persons who are incorporators, who elect initial directors or trustees, who in turn appoint officers
  
• May or may not have members – members have voting power
  
  
• Legal entity separate from its directors or trustees, and officers with its own bylaws or operating agreement – the principals are indemnified
  
  
• Liable for its obligations separate from the directors or trustees, and officers
  
  
• Has obtained tax-exempt status from the Internal Revenue Service
  
  
• Files “990” tax return which is open to public inspection
  
  
• May be eligible to receive public and private grants

Other types of entities include estates, trusts, employee benefit plans, and debtors in bankruptcy.

***

The enterpriship disciplines of entrepreneurship, leadership, and management apply to businesses, not-for-profits, and government agencies because they all have to transform ideas in income, influence others, and manage resources. Whether organized for profit or not, management has to be concerned about managing capital, net assets, or funds, and earning income, whether it be revenue sourced from sales, membership fees, or taxes.