What Is business entity

Business entity is a legal & economic legal (legal) entity that is structured in managing the factors of production in order to produce goods and services aimed at making a profit.

Whereas the understanding of a company is an organization established by a person or group of people or other bodies whose activities are to carry out production and distribution to meet the economic needs of humans.

Things that must be considered in establishing a business entity:

  • Goods and services that are being traded
  • Marketing of traded goods or services
  • Determination of the cost of goods sold and services and the prices of the goods being traded
  • Manpower requirements
  • Internal organization
  • Expenditure
  • The type or form of business entity chosen

Form of Business Entity and Its Characteristics

business entity shape chart

Badan Usaha Di Tinjau dari Segi Kepemilikan

  1. State-Owned Enterprises (BUMN)

BUMN is all companies in any form and engaged in any field, either partly or wholly capital is state wealth, unless otherwise stipulated based on the law. State-owned business entity is a form of legal entity that is subject to all laws in Indonesia.

Meanwhile, according to the law, SOEs are business entities whose capital is wholly or partly owned by the state through direct investments originating from separated state assets.

Because its ownership is owned by the state, the company has the main goal of building economic, social , to create a just and prosperous society.

Specifically, the law governing state-owned enterprises is stipulated in Law No. 19 of 2013 concerning state-owned enterprises.

Characteristics of BUMN

    • Has the main goal to serve the public interest while seeking profit / profit
    • Legal status & regulated according to law
    • BUMN is generally engaged in vital services
    • Own name & wealth and are free to move to bind an agreement, contract, and relationships with other parties
    • Can be sued and sued, in accordance with paragraphs and articles in civil law
    • Some or wholly owned capital of BUMN can be obtained from loans in or outside the community in the form of bonds
    • Financially must be able to stand alone
    • Make an annual report that contains a balance sheet and income statement to be submitted to the interested parties.

The form of business entity which is owned by BUMN

  1. Service company

Service companies are a form of state-owned enterprise in which almost all of their capital is owned by the state. Perjan itself is oriented to community service so that it always suffers losses. Currently there are no SOE companies that use capital for the struggle because of the high cost of maintaining the agreement.

The characteristics of the company company

    • Providing services to the general public
    • Part of a government department
    • Led by a head who is responsible directly to the minister or director general of the relevant department
    • Company employee status is a civil servant (PNS)

Example Perjan

    • RSCM hospital
    • Radio Republik Indonesia (RRI)
    • etc
  1. Persero

A state-owned company is a company that carries out business with the primary purpose of making a profit, but providing services to the general public. Included in the Persero include PT Bank BNI, PT Bank Mandiri, PT Pelindo, PTP Nusantara, PT Garuda Indonesia, etc.

Characteristics of a Persero Company

    • To set up a company proposed by the minister to the president
    • The implementation of the establishment of the company is carried out by the minister and observes the law.
    • The legal status is a limited liability company that is regulated by law.
    • The capital is in the form of shares and part or all of the capital is owned by the state from the separated state assets.
    • The organ of the company is the GMS, directors and commissioners as well as ministers who are appointed to have power as government shareholders.
    • When the shares are wholly owned by the government, the minister acts as a GMS, but if only in part, then as a limited company shareholder.
    • GMS acts as the highest authority of the company & is led by directors.
  1. Public Corporation (Perum)

It is a state-owned company that aims to serve the general public while seeking profit. What you need to know is that the service & profit-seeking department must be balanced.

Examples of Public Corporation companies

    • Perum Pawnshop
    • Public Corporation Damri

Perum characteristics

  • The nature of the business carried out is more in the interests of the general public
    • Businesses that are run are generally engaged in public services
    • The capital is fully owned from the separated state assets
    • The organization, duties and authorities as well as responsibilities are specifically regulated in the law
    • The policy on tariffs / prices is determined by the government
  1. Regional owned enterprises

Regionally owned enterprise abbreviated as BUMD is a business entity in which the ownership of business capital is owned by the regional government, a business entity engaged in the field of public business that controls the livelihoods of many people

Characteristics of BUMD

    • The regional government holds the rights to all the assets of the business
    • Established based on local regulations
    • Led by a board of directors who are appointed & dismissed by the regional head or DPRD consideration
    • The government is domiciled in the company’s capital
    • The government has the authority to set company policies
    • In addition to serving the public interest, it also enables local revenue to finance regional development

BUMD example

    • Regional Development Bank (BPD)
    • Regional Water Company (PDAM)
    • City Transport Company (city bus)
    • Etc
  1. Private-owned Business Entity

Is a business entity in which the ownership of shares is wholly owned by individuals or private. The purpose of the establishment of this business entity is to look for profits so that the benchmark of success is how much profit is generated from the business.

Examples of private companies with nonprofit or profit motives are hospitals, schools, academics, etc.

Characteristics of BUMS

    • BU is fully managed and the capital comes from the private sector
    • Supervision is carried out in a hierarchical and functional manner carried out by company holders
    • BU The main focus is to seek maximum benefit
    • The distribution of capital is based on the company’s share ownership
    • BU Has a legal entity
    • Capital ownership does not come from the government (both groups and individuals)
    • Capital is not only owned by members but also from bank and non-bank financial institutions
  1. Mixed Business Entity

It is a business entity in which its capital ownership comes from a mixture of state (government) and private sector so that the ownership is owned by the government and private sector. For example PT Bank Central Asia.

Badan Usaha Ditinjau Dari Segi Badan Hukumnya

Based on legal entities, business form can be grouped into, Individual company, Firma, Guild Commanditaire and Company Limited

  1. Individual company

Is a company owned & run by one person. The characteristics of this form of business, among others, have a small labor force, the products and services produced are limited, and the technology used is still relatively simple. Usually the individual business form is a business sector that employs a small number of workers from the immediate environment

Characteristics of individual companies

    • Own capital & managed by yourself
    • Relatively limited capital ‘
    • In terms of establishment is quite easy
    • Bai for or for your own loss
  1. Firm (Partnership)

Is a partnership company to run a business by using a common name. In its activities all members are fully responsible, both individually and collectively for the obligations of the company to other parties. This means that if a company suffers a loss, it will be jointly borne, if necessary using their personal wealth.

Characteristic features

    • The allies are active in managing the company.
    • Responsibility is not limited to everything that happens.
    • Ends or dissolves when one of the members dies / resigns and or their business period has reached the specified limit.
  1. Limited partnership

Vennnootshcap commanditer or better known as CV is a partnership that is based on trust. CV is generally one of the forms of business chosen by entrepreneurs who want to do business but their capital is limited. CV is a form of business entity that does not have a legal entity & the wealth of its founder is inseparable from the wealth of CV.

CV membership is divided into two parties who have different responsibilities because of the different levels of involvement in management.

The characteristics of CV

    • It is a continuation of the firm.
    • Consists of active and passive allies.
    • Some members have unlimited responsibilities and some others are limited.
    • Company capital can be added easily.
  1. Limited Liability Company / PT

Is a business entity that has its own wealth, rights and obligations that are separate from the wealth, rights and obligations of the founders and their owners. In contrast to business forms in general, PT has a longer survival, because this company will continue to run even though the founder or owner has died.

Characteristics of companies that have a limited liability company:

    • Obligations to outside parties, are limited only to paid-in capital. This means that the company bears the debt, then the owner’s liability is limited to the paid up capital. Therefore personal assets are not guaranteed to pay off these obligations.
    • Ease of ownership ownership. This means that if a company shareholder wants to sell it for various reasons, it can easily be transferred to another party.
    • PT’s age is unlimited, meaning that the company has no age limit as long as it is still able to operate even though the owner or management dies can be continued by other shareholders.
    • The ability to raise large amounts of funds, meaning that if the company wants large amounts of capital, then the company easily creditor to trust it.
    • Freedom in conducting business activities, both types and lines of business as well as a wider and more diverse operating area.
  1. Cooperative Business Entity

The word cooperative comes from the word co operative means joint effort. Cooperative business is usually run by a group of people with the principle of togetherness to achieve certain goals, namely meeting needs. To be called a cooperative, at least the business is based on family.

The purpose of the establishment of cooperatives is none other than for the welfare of members in particular and the community in general and participate in building the national economy in the ranks of realizing a society that is advanced, just, prosperous, and based on the 1945 Constitution.

Based on the understanding and function of cooperatives above, then the main meanings of the cooperatives are contained:

    • Cooperative as a business entity, means that the cooperative must have the principles in accordance with the applied business entity that is trying to obtain profits or the remaining business results.
    • Cooperative as a people’s economic movement, means that cooperatives try to involve the people in doing joint efforts to meet their needs, to gain the benefits of increasing prosperity and mutual prosperity.
    • Cooperatives consist of people or legal entities, meaning that cooperatives consist of primary cooperatives where the members come from private individuals.

Function and Role of Business Entities

In order to realize its objectives the company needs to determine functions to expedite its business activities. These functions include, among others, the production function, the expenditure function, personnel, administration and marketing functions.


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