WHAT IS A TRADING COMPANY?
Commerce was born with the main function of organizing the circulation of goods, serving as a bridge between production and consumption, stimulating production development, and improving the socio-economic efficiency of production and business activities. A trading company was born due to the social division of labor and production specialization. It is an enterprise that mainly carries out commercial activities, buying and selling goods to earn profits. So what is a trading company? To better understand the concept of a commercial company, readers can refer to the article below by Newslax.
1. What is the concept of a trading company?
A commercial company is a type that is strictly regulated by law and has very strict requirements regarding the type of goods and form of operation to ensure business activities and development. Trading companies specialize in buying and selling goods and performing service activities to satisfy customer needs and earn profits.
Trading companies or purchasing companies are businesses that deal with different types of products that are sold to consumers, for business or government purposes. The merchant buys a variety of products, maintains stock or a store, and distributes the products to customers.
2. Characteristics of trading companies
First, a commercial company can carry out one or more commercial activities. Commercial activities are activities aimed at profit, including buying and selling goods, providing services, investing, and promoting trade. and other profitable activities. Commercial companies can carry out other activities such as production, service provision, financial investment, etc., but the proportion of commercial activities is still the main one. Commercial companies are different from households or individuals operating commercially in the market. A commercial company is an independent organization with a clear division of labor, managed by an official apparatus, and can carry out commercial activities independently with simple and quick procedures. .
Second, trading companies operate in the field of commodity trading to transfer goods from the place of production to the place of consumption. This is the most basic activity of a commercial company, determining functions, tasks, organizational structure and regulating business methods. Business income of a trading company includes income from main business activities and income from service and secondary business activities.
Third , the trading company performs the task of improving product quality by receiving customer opinions about product quality and making changes appropriate to customer needs. . Trading companies have the function of participating in improving quality in the production process and circulation stage. The production process includes four stages: production, distribution, circulation and consumption. These stages are closely related and interact with each other, in which the relationship between production and consumption is the most basic relationship.
Fourth , the Trading Company is also responsible for resolving relationships between manufacturing and trading enterprises. Because only then can we create a highly effective production and business chain in all stages. From there, creating a business model that brings high efficiency in work for all businesses participating in this business market.
3. Role of trading company
Commercial companies play a big role in promoting the economy and improving people’s lives. Commercial companies have very important responsibilities for the national economy. The company is directly related to relationships in society, between supply, demand and other types of production costs. Trading companies are a bridge between producers and consumer markets, helping to balance the development of economic sectors and daily life.
In addition, trading companies also play an important role in promoting production, expanding business, and circulating goods, creating conditions to continuously improve business efficiency of enterprises, actively contributing increases social accumulation, helps circulate goods to all parts of society, and successfully distributes goods from places of surplus to places of shortage through business activities, thereby increasing people’s enjoyment level. people. The role of commercial companies is proportional to people’s living standards, that is, when people’s living standards increase, the role of commercial companies becomes more important.
4. Types of commercial companies
Currently, there are many types of commercial companies that can choose to be established, including: One-member trading limited liability company, two-member trading limited liability company, trading joint stock company, etc. Depending on the type. For companies, the organizational structure and operating methods will be different:
The first is private enterprise
A private enterprise is a compact, flexible type of enterprise, owned by an individual who is responsible for all of his or her own assets for all activities of the enterprise. The owner is a single individual and has no legal status.
The owner of a private business has full authority to decide on all matters of the business and is responsible for it. Therefore, the owner of a private business cannot be a general partner of a partnership or a capital contributing member of a partnership, limited liability company or joint stock company. Because this will create a conflict of interest with a third party if the private enterprise owner has unlimited liability for the private enterprise or partnership, thereby affecting the performance of remaining obligations. again.
The second is LLC, including one-member LLC and LLC with two or more members.
LLC (limited liability) is a popular type of business today, with legal status recognized by law. There are two types of limited liability companies, classified based on many factors, mainly based on the number of capital contributing members:
– A one-member limited liability company is a limited liability company with only one individual or organization as the owner of the company.
– A LLC with two or more members is a LLC with from 2 to 50 members contributing capital.
This type of company has owners who are individuals or organizations. The size of a single-member LLC will be smaller and less complicated than the model of a two-member LLC. The company’s issues will be decided by the owner or the owner’s representative and will be solely responsible within the scope of their capital contribution. This type is essentially a capital investment company.
The third is a joint stock company
Joint stock companies are a popular type of business and play an important role in the development of the economy. A joint stock company includes founding shareholders, common shareholders and preferred shareholders, but they all have the same ultimate goal of seeking profits from their capital contribution. Therefore, the process of maintaining production and business activities of a joint stock company is always associated with the rights and interests of shareholders in general and founding shareholders in particular. This is the most complete type of company and has a more complex scale and control mechanism than the above types. Joint stock companies usually have two models as follows:
Model one: General Meeting of Shareholders, Board of Directors, Supervisory Board and General Director or Director. If the company has less than 11 shareholders or less than 50% of institutional shareholders, it is not necessary to have a supervisory board.
Model two: General Meeting of Shareholders, Board of Directors and General Director or Director. For this model, the company needs a supervisory board with the condition that the company has an internal control board and at least 20% of the board members are independent members.
The joint stock company model is more complex than the remaining company models, with specific conditions on scale recognized by law,…