7 Types of Business Organizations Based on Their Purpose

Types of Business Organizations

Social Organization (Non-Profit Organization)

This social organization is often referred to as a community organization, because this social association is formed by the community, both legal and non-legal, which functions as a means of community participation in the development of the nation and state. As creatures who always live together, humans form social organizations to achieve certain goals that they cannot achieve on their own. Types of Business Organization Based on Purpose

Initially, social organization was formed from norms that were considered important in social life. The formation of social organizations begins with individuals who need each other, then rules that are known as social norms emerge. Social organization is often referred to as a social institution.

1. Formal (Official) Organization

A formal organization is an organization formed by a group of people / society that has a well-defined structure that explains the relationships of authority, power, accountability and responsibility, and has the power of law. Types of Business Organization Based on Purpose

The existing structure also describes how the channels through which communication takes place. Then show the specific tasks for each member. Examples of formal social organizations are

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  1. Church,
  2. public school,
  3. public charity,
  4. saki house,
  5. public clinic,
  6. political organization,
  7. Community assistance in terms of legislation,
  8. Volunteer service organizations,
  9. Labour Union.

2. Informal Organization (Unofficial)

Membership in informal organizations can be achieved both consciously and unconsciously, and it is often difficult to determine the exact time a person is a member of these organizations. The exact nature of the relationship between the members and even the objectives of the organization concerned are not specified. Examples of informal organizations

  1. An informal meeting is like having dinner together.

Informal organizations can be transferred to formal organizations if the relationships within them and the activities carried out are structured and formulated.

Type of business organization based on its objectives

Commercial Organizations (Profit Making Organization)

Commercial organizations are often referred to as trade organizations / profit organizations, because these organizations are formed with the aim of generating profits. Types of Business Organization Based on Purpose

Commercial organizations are formed to make a profit and increase the prosperity of the organization and the people involved in it.

Owners and operators of a commercial organization get rewarded according to the  time , effort, or  capital  they give. Basically, this organization consists of various types, including the following:

Individual company

According to Law no. 3 of 1982 concerning Compulsory Company Registration Article 1B, what is meant by company is any form of business that carries out any type of business that is permanent in nature and continues to manage, which is established, works and is domiciled in the territory of the State of Indonesia with the aim of gaining profit or profit. In other words,

A company is a business entity owned by one individual. All profits obtained from this business are owned by the manager and the manager also bears all the risks that are obtained.

The establishment of an individual company is not regulated in the KHUD and no agreement is made. Because, it was only founded by one entrepreneur.

Limited Liability Company (PT)

A limited liability company is a legal entity that is a capital partnership, established based on an agreement, and conducting business activities with an authorized capital which is entirely divided into shares.

The organization that organizes a Limited Liability Company, which consists of the General Meeting of Shareholders (GMS), the Board of Directors and the Board of Commissioners. Each of these organs has its own function and role.

Limited liability companies are a form of legal entity that is popular and most widely used by entrepreneurs in Indonesia as a legal basis for conducting business activities in various sectors such as Industry, Trade, Shipping, Tourism, Construction Services, Transportation, Mining, Agribusiness, Property and so on.

Limited Liability Company (CV)

Limited Liability Company or Commanditaire Vennootshap or commonly known as CV is a form of business entity that is commonly used by small and medium enterprises (SMEs) in Indonesia, although there are also large business groups that use CV as their business entity.

CV is not a legal entity like PT, because there is no law that specifically regulates this Company. Another fundamental difference between CV and PT is the capital, in a Limited Liability Company the capital of the company is not stated in the deed of establishment as is the case with PT.

The companies must make a separate agreement regarding this matter, or keep a separate record regarding the paid-up capital. Examples are business activities in various fields including the trade sector, construction services, industry or other service sectors.

Firm (FA)

Firma is a form of business entity that is established and owned by two or more persons, and generally established with an Authentic Deed as a Deed of Establishment and made by a Notary in Indonesian.

This business entity is mostly used by several or a group of people who have the same expertise to provide services or carry out business activities in the service sector.

The founders of the firm generally know and trust each other and each member knows and understands all the risks that arise and is the responsibility of the founders. The aims and objectives of this company can be general or specialist in nature. However, generally these business entities were established for the purpose and objective of carrying out business activities in the service sector.


Cooperatives are associations of people who join and conduct joint ventures on the basis of cooperative principles, so as to get greater benefits at lower costs through companies that are democratically owned and supervised by their members.

Commercial organization is different from social organization, because the goals and values ​​adopted and applied by the two types of organizations are different and the differences in values ​​also make the behavior of each organization different.

In making decisions, commercial organizations will position profits and losses financially or materially as the determining criteria, while social organizations will make the advantages and disadvantages of social aspects as determining their fate.

Both types of business organizations prioritize efficiency and effectiveness by using the principle of minimizing losses and maximizing profits, but each organization uses different values ​​and standards of measurement.

In general, establishing a business in the form of a Limited Liability Company or PT is better than an individual or a partnership. In terms of flexibility, PT can do business with any company. In terms of professionalism, PT looks more professional than individuals and partnerships.

When viewed from the risk, the risk is equal to the capital invested in the PT, personal assets will not be taken if there is a problem at the PT. Of course, we have to professionally manage the Limited Liability Company that we have established so that it can progress and open up more jobs.


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