Key Criteria for Classifying Business Organizations

Classification by Legal Form

All companies must have a legal form, which is determined, among other things, by the number of people involved in creating it, by the capital provided, and by the size. We can distinguish:

1. Sole Trader: When the owner of the company is the only person who assumes all risk and is responsible for managing the business.
2. Companies (Societies): Where people decide to invest in a company, they may form a society. At present in Spain, the following types of companies exist:
   • Sociedad Anónima (S.A.)
   • Sociedad Anónima Laboral (S.A.L.)
   • Sociedad de Responsabilidad Limitada (S.L.)
   • Sociedad Cooperativa de Responsabilidad Limitada
   • Sociedad Colectiva
   • Sociedad Comanditaria
   • Regular Venture Contract Accounts

Classification by Activity Sector

Economic activity in a country can be divided into three sectors: primary, secondary, and tertiary.

1. Primary Sector: This group includes extractive industries (mining, fisheries, agriculture, livestock, and forestry).
2. Secondary Sector: This sector includes all companies processing products obtained in the primary sector and also producing new products (canned goods, machinery, iron and steel industry, etc.).
3. Tertiary Sector: This sector includes utilities and services, such as banks, insurance companies, hospitals, public utilities, and commercial companies engaged in sales.

Classification by Capital Ownership

The government can create a business of which it is totally the owner, or while participating in business with private individuals. Depending on the degree of participation, companies can be divided into public, private, and mixed.

1. Public Enterprises: These are owned by the State, which acts as an entrepreneur in certain sectors where private initiative is not present.
2. Private Companies: They are those belonging to private individuals.
3. Joint Ventures (Mixed Companies): They are those in which ownership of the company is shared between the state and private investors.

Classification by Size

Depending on the size of the company, they can be differentiated into three groups: Small enterprise, Medium enterprise, and Large enterprise. The usually accepted criteria for classifying companies by size are:

1. The Number of Employees: Small firms typically have between 1 and 50 employees, medium firms between 50 and 500, and large companies over 500.
2. The Total Value of Transactions Carried Out (Turnover): According to this criterion, small companies are considered those with a turnover below 50 million per year, medium-sized enterprises with a turnover between 50 and 1000 million, and large companies that bill more than 1000 million.

Classification by Geographical Scope

Based on the territorial scope, four groups can be considered:

1. Domestic Companies: Those that work in one country.
2. Multinational Enterprises: Large companies that are active at the same time in several countries.
3. Regional Companies.
4. Local Businesses.