There are different types of companies and, to understand how to classify them, it is important to know the most used criteria to do so, such as size, line of business, their legal constitution and even the way in which they use technology.
When we talk about the different types of companies, it is just as important to understand the criteria to classify them as it is to understand each type of company and its characteristics.
Although you may have heard more than a dozen company classifications during your entrepreneurial adventure, we have prepared a list of the 26 most common types of companies so that you can get to know them thoroughly and master their organization.
Do you want to know what kind of company you have or should start? Continue reading!
What is a company?
A company is the group of people who, through the use of material and technical resources, carry out a productive activity in order to meet previously established objectives and generate an economic benefit.
If what you are looking for is a definition of a company with a legal basis, Article 5 of it establishes:
“’Company’ is understood as the instrumental organization of personal, material and immaterial means, ordered under a direction for the achievement of economic or charitable purposes.”
For its part, it points out multiple meanings for the word, such as, for example,
Organizational unit dedicated to industrial, commercial or service provision activities for profit.
It is important to clarify that, although definitions like the previous ones establish the company as an “organization”, “group” or “economic unit”, others like this one (Mexico), explain that a company also:
…can be defined as an activity that consists of coordinating or organizing both corporeal and incorporeal elements, as well as the work of people to produce or exchange goods or services”.
Although the company can be defined as the organization or group that carries out a productive activity, the productive activity carried out is also considered as a company.
This is important because in the universe of entrepreneurship, you will surely come across these two ways of using the term, depending on the legal or economic context in which you find yourself. So, both meanings of company are correct.
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The 26 most common types of companies and how to classify them
There are several ways to catalog them, but here we present the 26 most common types of companies:
- Micro
- Small
- Median
- Great
- Local
- Regional
- National
- Multinational
- transnational
- extraction
- Transformation or manufacturing
- Commercial
- of services
- public
- private
- mixed
- of joint-stock company
- limited liability
- collective
- Cooperative
- Limited
- Simplified Action
- handmade
- Traditional
- with average technology
- With advanced technology
Now, these 26 types of companies can be classified according to six basic categories, which are:
- Size
- Geographic scope
- turn or activity
- Origin of capital
- legal constitution
- Use of technology
Let’s see each type of company, its definition and the category to which they belong.
Size
This criterion considers the number of employees, as well as the income received by the organization. According to the Ministry of Justice and Human Rights, companies can be:
1. Microenterprise
A microenterprise has up to 5 workers. Most start at this level.
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2. Small business
We speak of a small company when its staff is from 6 to 50 workers.
3. Medium business
If your workforce has between 50 and 200 workers, it is a medium-sized company.
4. Large company
Large companies have more than 200 workers.
Geographic scope
For this criterion, the area of operation of the company is considered, contemplating how far its activities reach within the global market.
5. Local company
A local business is one that operates solely within a community or limited geographic area, such as a town or city.
6. Regional company
When the organization allows to reach more than one city and the operation reaches more points within a state or a larger geographical area, we speak of a regional company.
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7. National company
To be national in scope, the company’s business activities must have almost total or very extensive coverage within the borders of a country.
8. Multinational company
The success of the companies extends its reach to other countries, but the headquarters of its operational center remains in the nation of origin.
9. Transnational company
In this case, in addition to the fact that the company reaches different countries, its operation is decentralized, that is, each global region operates independently.
turn or activity
Companies can have multiple activities or diverse lines of business, but it is possible to group them into five main types, also known as “industry sectors”.
10. Extraction Company
The main activity of this type of organization is to obtain natural resources (renewable or non-renewable) directly from their sources, such as the sea, mines, oil wells, etc.
11. Processing or manufacturing company
A company of this type has as its main resource raw materials —such as vegetables, wood or metals— that it transforms into finished products or bases to generate other products.
12. Trading Company
This category includes all those companies dedicated to the acquisition of some good —finished products or even raw materials— to sell them to consumers or other companies.
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13. Service company
All those organizations whose main activity is to offer —financial resources, electricity or internet, for example— apply here to satisfy the needs of the market.
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Origin of capital
This classification considers the origin of the funds with which the organization mostly operates.
14. Public company
If the capital with which it operates originates from the government, then it is a public company. In this case, the company belongs as such to the State.
15. Private company
A private company works with capital provided by the private sector, that is, its creators, shareholders and owners do not belong to the government.
16. Joint venture
When an organization operates with private and public capital, it belongs to this category. Joint ventures are usually dedicated to the extraction or transformation of materials from resources regulated and supervised by the State.
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legal constitution
Upon being created, every company must acquire a legal identity in order to operate within the labor, economic and fiscal laws of the country where it carries out its activities. This category is also known as “commercial companies”.
17. Public limited company
In this type of company, a group of partners (outside the ranks of the company) come together to acquire shares, finance the company and divide the profits. And that’s where your responsibilities end.
18. Limited Liability Company
Unlike the previous type, in this case the responsibilities of the partners are determined by their level of participation in the financing of the company. The greater the contributed capital, the greater their rights within the organization.
19. Collective enterprise
In these organizations, the partners share responsibilities in an unlimited, solidary and subsidiary manner. For example, in case of debt, this can fall on all the partners or on those who sign as responsible for the main debtor.
20. Cooperative company
These companies are made and controlled by their members. Here, both the responsibilities, as well as the profits and losses, are distributed equally among the partners of the company, but in case of debt, personal assets are not at stake.
21. Limited company
There are two types of partners here: limited partners and limited partners. The former have the same responsibilities as the partners in a joint venture (active participation, subsidiary debt, etc.), while the latter may have shares, but cannot manage the operation.
22. Simplified Stock Company
This type of company seeks to make life easier. Only one partner is needed to establish it and both the resources and the responsibilities are limited to what each partner contributes.
Use of technology
For this last category of company types, the technological advance in the resources, processes and tools used within the operation is considered. The more modern and automated the production, the higher the level of technological use.
23. Craft Company
If the elaboration of the goods or services is mostly done with manual tools and the infrastructure is limited, it is considered an artisanal company.
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24. Traditional company
In these organizations, basic tools are used for processes that range from the transformation of raw materials, to packaging or logistics, but which do not add a characteristic value to the finished product.
25. Company with medium technology
In this type of company, machinery and mechanized processes are used to create the finished products that are going to be marketed. Here, manufacturing plants, assembly lines or mechanical methods that accelerate the speed of manufacturing are already used.
26. Company with advanced technology
These companies apply automated processes to production and use advanced computing or engineering to manufacture more complex products. Human supervision of machinery replaces manual work.
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What types of companies exist in Argentina?
In Argentina we have all the types of companies mentioned in the previous section. But, for legal and company formation purposes, the six most common types that exist are:
- Limited companies (SA)
- Company in collective name (SNC)
- Cooperative societies (SC)
- Limited liability company (SRL or SL)
- Company limited by shares (SCA)
- Stock company…
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