Learn It 1.1.4: What Is Business?

Comparing Types of Businesses

It’s not until you look behind the scenes that you will see the differences between a for-profit and nonprofit business. The following graphic compares the attributes of for-profit and not-for-profit businesses and highlights differences and similarities.

Two overlapping circles. The circle on the left represents for profit businesses and the circle on the right represents nonprofit businesses. Characteristics in the for profit circle are: owned by individuals, partners, or shareholders; profit is used to pay owners, partners, or shareholders; and profits are subject to taxation by local, state, and federal authorities. Characteristics in the non profit circle are: generates revenues from contributions; operated by board of directors, trustees, or managers; profit is used to further the mission of the organization; and profits are NOT subject to taxation by local, state, and federal authorities. Characteristics in the part of the circles that overlap are: incurs expenses for operations; provides goods and services to customers; pays salaries to employees and managers; and generates revenues from sales.