To perform bookkeeping and accounting properly, we need to understand the Business structure.
WHAT IS BUSINESS STRUCTURE ?
A business structure is a company’s legal organization, which determines who owns the company, how profits are distributed, how it will be taxed, and what roles will perform which tasks.
In easy words,
• It simply means what goods or services business sells everyday.
• What monetary activities business does everyday?
• How does this business make money?
What is Ownership Structure ?
Ownership structure refers to the composition and distribution of ownership within a company or organization. It delineates the hierarchy of ownership, detailing the individuals or entities that hold shares or stakes in the entity. This structure outlines the ownership rights, responsibilities, and decision-making powers of each stakeholder, influencing the governance, strategic direction, and operational dynamics of the entity. Ownership structure can vary widely, ranging from privately-held firms with concentrated ownership to publicly-traded corporations with dispersed ownership among shareholders. It plays a pivotal role in shaping corporate governance, management practices, and shareholder relations, ultimately impacting the organization’s performance, accountability, and sustainability.
We must know how the company is formed, who takes the company’s legal decisions and how the company is registered. In Nepal, companies can be Private or Public. They might be processing only pan bills or VAT. To perform accounting, we must have these knowledge and network to these people.
What is Governance Structure ?
Governance structure refers to the framework of rules, processes, and relationships that guide decision-making, oversight, and accountability within an organization. It outlines the distribution of power, responsibilities, and authority among various stakeholders, including management, shareholders, and other relevant parties. A robust governance structure establishes mechanisms for transparency, risk management, and ethical conduct, ensuring alignment with organizational objectives and stakeholder interests. This structure typically includes elements such as board of directors, executive management, committees, and internal controls. All working together to uphold integrity, compliance, and effective management practices. A well-defined governance structure fosters trust, enhances stakeholder confidence, and supports long-term value creation for the organization.
What is Management Structure ?
Management structure refers to the organizational framework that outlines the hierarchy, roles, and responsibilities of individuals and teams responsible for directing and coordinating activities within an organization. It delineates the chain of command, reporting relationships, and decision-making processes that govern how tasks are assigned, executed, and monitored. A management structure typically includes layers of management, such as top-level executives, middle managers, and frontline supervisors, each with distinct duties and levels of authority. Clear communication channels, job descriptions, and performance evaluation criteria are essential components of an effective management structure. By defining roles and expectations, the management structure facilitates efficient operations, fosters accountability, and supports the achievement of organizational goals and objectives.