(i) An economic activity: Business is
considered to be an economic activity
because it is undertaken with the object
of earning money or livelihood and not
because of love, affection, sympathy or
any other sentimental reason.
(ii) Production or procurement of
goods and services: Before goods are
offered to people for consumption they
must be either produced or procured
by business enterprises. Thus, every
business enterprise either manu-
factures the goods it deals in or it
acquires them from producers, to be
further sold to consumers or users.
Goods may consist of consumable
items of daily use such as sugar, ghee,
pen, notebook, etc. or capital goods like
machinery, furniture, etc. Services may
include facilities offered to consumers
in the form of transportation, banking,
electricity, etc.
(iii) Sale or exchange of goods and
services for the satisfaction of
human needs: Directly or indirectly,
business involves transfer or exchange
of goods and services for value. If goods
are produced not for the purpose of
sale but say for internal consumption,
it cannot be called a business activity.
Cooking food at home for the family is
not business, but cooking food and
selling it to others in a restaurant is
business. Thus, one essential
characteristic of business is that there
should be sale or exchange of goods
or services between the seller and
the buyer.
(iv) Dealings in goods and services
on a regular basis: Business involves
dealings in goods or services on a
regular basis. One single transaction
of sale or purchase, therefore, does not
constitute business. Thus, for example,
if a person sells his/her domestic radio
set even at a profit, it will not be
considered a business activity. But if
he/she sells radio sets regularly either
through a shop or from his/her residence, it will be regarded as business activities.