Classification of companies, with explanations and examples

We are currently living in a period of unrestrained (and complex) economic activity, where major decisions and trends are marked by companies globally and to a lesser extent locally. The classification of enterprises is a way of ordering and organizing the business sector to establish good financial development in modern societies. In the case of Spain, which interests us, the administrative fabric is to a certain extent complex.

For that, it is important to take into account the classification of existing companies in the legal and economic order, depending on the State Ministry of Finance, which is the competent body and the public regulator of the Spanish economy. This is not a minor problem, as mismanagement or registering the type of business we want to start can determine its future, which can lead to both success and failure.

    What is a business?

    A company is a productive unit formed by a certain number of people and / or shareholders with the ultimate goal of maximizing a certain economic activity. Depending on their nature, companies can take different forms which we will detail in the following points.

    1. Classification of companies according to their legal form

    Next, we will make a list of the most common companies taking into account the legal form.

    1.1. Self employed

    This type of business is exclusively individual. It has no partners, it has no more organizational structure than it does staff. The individual decides, manages, organizes and determines the capital that he can bring to generate an economic activity.

    1.2. Public limited company (SA)

    This type of business is probably the most widespread at the national level. A public limited company is made up of a certain share capital, an amount agreed upon by the shareholders who make up the company. The management of the company is done by the election of a general manager or a director, elected among the shareholders and renewable temporarily. The minimum capital to be contributed is € 60,000 gross.

    1.3. Limited liability company (SL)

    Within the classification of enterprises, societies take different forms. The limited company is designed to promote the creation of small and medium-sized enterprises, which is generally one of the most common forms of starting a business. The minimum capital is € 3,000 gross, with a maximum of 5 members.

    1.4. Cooperative Society

    Cooperative societies are particularly common in the primary sector. That is to say agriculture, fishing and breeding. Members voluntarily join the cooperative and unsubscribe in the same way. The main objective of this association is improve the knowledge and resources of different companies to achieve a common goal / benefit. The capital to be contributed will be decided in the articles of incorporation of the company.

    1.5. Civil society

    This type of business is one of the most interesting in recent years. The most interested sector is the technico-legal. That is to say professionals of the legal sector, builders, computer engineers and surveyors, among others. In addition, nearly 90% of small businesses opt for this method as an association between self-employed persons and professionals in the same sector.

      2. Depending on the size of the company

      This point turns out to be another fundamental pillar when choosing the final type of business. Let’s look at the different classifications based on the size which is represented by the number of workers, mainly.

      2.1. micro enterprises

      They do not exceed ten employees, including the founder of the company. They can become organizations with potential if you invest in them, envisioning innovative ideas with a vision for the future. Here we find entrepreneurs and start-ups.

      2.2. small business

      In the small business, we have one of the most common models for creating such an entity. Of all the classifications, this is the most common. It usually has between 10 and 50 workers, A business of a family nature or trusted friends who invest capital in their own resources or savings. Bars, restaurants, fashion store, etc.

      2.3. medium business

      She is the mother of all who make up this list. They come under the label “SMEs”, small and medium-sized enterprises which constitute a large part of the economy of any country. With a minimum of 60 workers and maximums ranging from 300 to 400, they are solid structures and have great economic success.

      2.4. large companies

      This is clearly the riskiest bet. They usually have no less than 300 employees, a complex and structured organization, and their ultimate goal is to internationalize the product offered. The luxury sector is a good example of what a big company is: Jewelry, watchmaking, automotive sector, catering franchise, etc.

      3. Classification of companies according to their capital

      Finally, the origin of capital is a common resource for the classification of companies, which are essentially 3 types. Let’s see.

      3.1. private capital

      All the investments and financial resources deposited come from the effort that each individual at a particular level contributes to the constitution of the company. Obviously, the goal is to achieve maximum profit with the invested capital.

      3.2. public capital

      Contrary to what happens in the previous point, public capital companies are subsidized by money (tax collection) from state coffers to carry out economic activities that aim to provide services to citizens on the street. In this case, profitability is not sought or profits are made.

      3.3. mixed capital

      Such enterprises are very common in societies or countries of the so-called welfare state model. The country in question aims to offer a specific service to reach the maximum population possible. However, in some cases public investments are not enough and private entities are used to finance the project. The health sector (public hospitals) and the education sector (universities) are heavily fed by this type of capital.

      Bibliographical references:

      • Handy, C. (2005). Understanding of organizations. London: Penguin Books.
      • Morgenstern, J. (1998). Organize from the inside out. Oxford: Owl Books.

      Leave a Comment