Mr Rouse's Online Classroom

Beyond Chalk: Education Innovation

Types of Businesses

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In Australia there are many types of businesses: small, medium and large. This method of classification seems simple enough, or is it? Think of businesses you have dealt with this week. How can you tell what size they are? When you enter a business premises it is often very difficult to tell whether you are standing in a small, medium or large business. The business may only occupy a small building or only have a small number of employees working there, but it may be part of a larger national chain of businesses or it may be owned by a multinational corporation. Alternatively, the business may only be owned by one person or it may be owned by a large group of people. It may be part of a very small industry or it may form part of a much larger industry.

According to the Australian Taxation Office a business is defined as any activity that is carried out on a regular basis with the intention of making a profit. In determining whether an activity is a business or just a hobby, the courts have provided some guidelines to help determine whether a business exists or whether it is, in fact, a hobby. Guidelines adopted by the courts include the following:

  • Does the activity have a significant commercial purpose or character?
  • Does the person have more than just an intention to engage in business?
  • Does the person have a purpose of profit as well as a prospect of profit?
  • Is there repetition and regularity to the activity?
  • Is the activity of the same kind and carried on in a similar manner to businesses in the same industry?
  •  Is the activity planned, organised and carried on in a business-like manner?
  • What is the size, scale and permanency of the activity?
  • Is the activity better described as a hobby, recreation or sporting activity?

Can you answer?

  1. Identify six businesses with which you have dealt with in the past week.
  2. Classify each of the businesses you identified as either small, medium or large businesses.
  3. Develop a list of criteria for determining the size of a business.
  4. Where could you go to find out information about starting your own business?
  5. What does it mean to run a business based on ethical principles?
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