Company Abbreviations

What is Company?

A company is an organization that carries out economic activities for commercial purposes, through the production and sale of goods or services.

Also known as a business activity, a company engages in the sale, production and purchase of goods or services.

One of the main objectives of a company is economic gain, the generation of profit that results from the service provided or the product sold.

Companies also aim to achieve certain results, which are projected as goals to be achieved, according to the company’s main mission. To achieve results and make a profit, the company must follow a previously defined strategic plan.

The person responsible for managing the operation of the company is the entrepreneur. He manages the management and operation of the company in the market, with the help of the employees. To fulfill this task, the entrepreneur needs to know the managerial and administrative processes, such as results analysis and resource management.

In these tasks, it is common for the entrepreneur to have the help of an administrator, a professional specialized in planning, organizing and evaluating business results.

The 3 fundamental elements of a company

Companies are made up of three elements or resources:

materials : includes raw material, machinery, technology and all the logistics necessary for the company to function;
Humans : entrepreneurs, administrators and employees who hold positions and perform functions in the company. Customers, consumers and suppliers are also part of this category;
financial : money for investments, purchase of raw materials, payment of employees and payment of taxes.

What are the types of company?

There are five types of company: individual micro-entrepreneur, individual entrepreneur, individual limited liability company, simple partnership and business partnership.

1. Individual Microentrepreneur (MEI)

The individual microentrepreneur is the sole partner of the company and can hire a single employee. Also, he cannot have affiliates of the business.

This type of company was created to fit self-employed professionals who work with service provision. In this classification, these self-employed are transformed into small entrepreneurs.

The annual billing limit of an individual micro-entrepreneur should not exceed R$ 81 thousand.

2. Individual Entrepreneur (EI)

The individual entrepreneur works alone, without being part of a society. He carries out the company’s activity on his behalf, only with his investments. Companies without partners that sell products or services are examples of individual entrepreneurs.

An important characteristic of the individual entrepreneur is the liability of the company, which is unlimited. This means that the entrepreneur will be able to use company assets or personal assets to fulfill obligations (such as labor debts and outstanding payments).

To be an individual entrepreneur, the annual turnover cannot exceed the value of 360 thousand reais.

3. Individual limited liability company (EIRELI)

EIRELI is also a company formed by a single partner. In this type of business, the partner is not liable for debts of the company with his personal assets. Any debts or payments must be made from the company’s equity.

To register this company, the entrepreneur must have a minimum capital equivalent to one hundred minimum wages and the annual revenue has no established limits.

It can be used to market and produce goods and services and also to represent self-employed professionals.

4. Simple partnership

A simple partnership must be formed by at least two partners, who will have unlimited equity liability. Therefore, partners may have to fulfill financial obligations with personal assets, in addition to business capital.

This type of company is used to provide services in various specialties (called intellectuals), such as: doctors, lawyers, engineers and artists in general.

The annual revenue of a simple partnership cannot exceed R$ 4.8 million.

5. Business company

Business companies are formed by at least two partners, who are responsible for the financial responsibilities only with the company’s capital, in proportion to the value of their shares.

Partners will only be required to pay debts with personal assets in special cases, such as labor debts or tax debts.

Business companies can be used in many fields of activity, such as providing services and selling goods, but they cannot commercialize intellectual and autonomous activities.

They must operate in the form of a limited liability company (Ltda.) or a corporation (S/A). A limited liability company has a simpler operation and the company’s capital is divided among the partners, in the form of quotas.

A corporation, on the other hand, is a little more complex and has the company’s capital divided into shares, which can be purchased even by people who are not part of the society (shareholders).

What is the difference between public and private companies?

Companies can also be classified as public, private or mixed. This classification takes into account the origin of the company’s capital.

public company : these are companies that have capital invested by the State and provide services linked to state activity. Therefore, they are also administered by the State. Examples: Correios and Caixa Econômica Federal;
private company : companies that have private capital and are managed by their owners, such as companies that sell products and services in general.
mixed company : are companies with mixed capital (capital invested by the state and private capital). Petrobras and Banco do Brasil are two mixed capital companies.

What are the business sectors?

The classification of business sectors follows the company’s area of activity:

primary sector : formed by the companies that carry out activities of exploration of natural resources or sale of raw material to companies of other sectors. Fisheries and agriculture are examples of activities in this sector;
secondary sector : this sector includes companies that manufacture industrialized products and sell them to consumers, such as the clothing, food and technology industries.
tertiary sector : it is composed of companies that operate in the area of commerce, sale of products or provision of services. Commerce in general and self-employed professionals are examples of tertiary sector activities.

List of Acronyms Related to Company