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What is an Enterprise Company? [Simple and Quick Definitions]

If your small business or startup will soon officially go into business, then you need to register with your state or your federal government.

One means of registering your company that you might be interested in is as an enterprise company.

If you’re not 100% clear on what an enterprise company is, then this short, to-the-point guide is for you.

We’ll succinctly explain what an enterprise is, go over the types of enterprises, and discuss if you can register your company with the word ‘enterprise’ in the name.

Let’s begin!

What Is an Enterprise Company?

So what exactly is an enterprise company?

An enterprise refers to a for-profit company. Thus, technically, any business can be an enterprise.

That said, entrepreneurial projects such as startups are most frequently associated with the term enterprise today.

An enterprise is not necessarily the same as a company.

meeting office life GIF by South Park
Source: Giphy

For instance, the aforementioned definition of an enterprise proves the association with startups. You’ll also hear the word enterprise used in certain industries more often than others, specifically, in IT.

A company is a company no matter what type it is. Its primary goal is to drive profitability.

An enterprise, while it does want to generate profits too, does not necessarily make that the entire goal to the same extent that a company does.

The founder of an enterprise versus a company also differs. Entrepreneurs naturally gravitate towards enterprises for reasons that extend beyond profit.

Perhaps they want to introduce competitive pricing that’s lower than what everyone else is charging.

An enterprise might strive to fill in a gap, producing something that doesn’t yet exist but needs to. They might also be more concerned with solving a specific problem.

Commonly, an enterprise has a large team, a complicated structure and interconnected processes. Compared to startups, enterprises more often automate their workflows or undergo complete digital transformation to organize the work with maximum efficiency and output.

Read also: 12 Entrepreneur Personality Traits We Should All Aim For

What Are the Types of Enterprises?

There are four main types of enterprises that a new company can select from when registering. Let’s go over them now.

Public Limited Company

A public limited company or PLC is sellable to the general public once the enterprise attains certain financial benchmarks. Legal and regulatory criteria must be met as well.

For instance, the enterprise must be upfront about who it’s traded with and for how long, how many accounts it has open, where those accounts are located, and other elements of its financial standing.

Selling public shares is more than a means of earning more profit for a PLC. Through these increased earnings, a PLC can also expand thanks to its boost in funds.

Private Limited Company

A private limited company, abbreviated as an Ltd., is considered a free enterprise.

Even still, the enterprise has its own identity and has gone through all the steps to become a legally incorporated business.

Within a private limited company are shareholders. Each shareholder takes on a chunk of the debt liability for the enterprise as a whole.

These shareholders are also granted freedoms such as the ability to choose directors who will make decisions about the enterprise’s business direction, which operations are carried out, and how they’re carried out.

That said, a private limited company still has a manager or boss just like any other company, and they deal with the daily operational responsibilities.

If you’re setting up a business under the Private Limited Company structure, it’s crucial to establish a robust legal foundation.

An essential step in this process is to set up an operating agreement for your LLC, laying out the company’s operational and financial decisions among its members.

Not only does this protect your assets, but it also clarifies the management roles within the company, ensuring a smoother operation and resolution of potential conflicts.

Excited Parks And Recreation GIF by PeacockTV
Source: Giphy


The next type of enterprise is a partnership.

Several people will come together and collectively become owners of the enterprise. Each owner can make decisions about the future of the enterprise and will also divvy up profits.

Not all the earnings or responsibilities in an enterprise partnership may be equal though. Some partners may be deemed senior partners, who would out-earn and out-perform junior partners.

Other types of hierarchies among the partners can be assigned, but this is up to each individual partnership.

The partners might have their own specialties that altogether make the enterprise a more efficient operation or they might all specialize in the same area.

Read also: These 20 Team-Building Questions Are Pure Gold

Sole Proprietorship

That brings us to sole proprietorships, the last type of enterprise of the four.

Of each enterprise type we’ve looked at in this section, which do you think would be the smallest? If you guessed a sole proprietorship, you’d be correct.

Sole proprietorships can include trade businesses, online businesses, and even small businesses.

Individuals can be sole proprietors as well. For example, if you sold a product on a site like Etsy or Amazon, you’d be a small enterprise but an enterprise, nevertheless.

Can Your Company Name Include the Word ‘Enterprise’?

The word “enterprise” instantly elevates any company or brand name. As such, you might be very interested in using the term in your company name.

Well, you should only do this if yours is indeed an enterprise brand. To just call your company an enterprise but not truly be an enterprise is confusing right out of the gate.

It also comes across as deceitful to your customers and any other business partners you may have.

Read also: 10 Simple Strategies to Keep Customers Happy


Enterprise companies can include partnerships, sole proprietorships, private limited companies, and public limited companies.

Now that you better understand enterprise companies, you can make sound business decisions for the future of your startup!

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