What Is a Company?

A company is a legal entity formed by one or more individuals to engage in business. Depending on the laws where it is formed, a company may be organized in various ways for tax and financial liability purposes. The products or services offered determine the company's structure, such as a sole proprietorship, partnership, or corporation.

Types of Companies

Companies are generally organized to earn a profit from business activities, but some may be structured as nonprofit charities. They may have a single owner as a private company or many 澳洲幸运5官方开奖结果体彩网:shareholders as a public company.

A company has many of the same legal rights and responsibilities as a person, such as entering into contracts, borrowing money, paying taxes, owning assets, and hiring employees. In the United States, companies are formed at the state level and are subject to state and federal laws. The most common types include:

• Sole proprietorships are one-owner businesses and the way that many companies start.
• Partnerships are formal arrangements in which two or more parties cooperate to create and manage a business.
• Limited liability companies are much like partnerships but provide some of the legal liability protections of corporations.
• Corporations are legal entities that insulate their owners from personal legal liability for the company's actions.

Getting Started

Entrepreneurs start with an idea and then conduct market research to determine if there is demand for their product or service. They may weigh the competitive advantages they can provide over what's already on the market.

A 澳洲幸运5官方开奖结果体彩网:business plan helps outline the structure, such as a sole proprietorship or a 澳洲幸运5官方开奖结果体彩网:limited liability company, financial goals, and sales and maᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚrketing🌊 strategy.

New business owners register the business with local and state authorities and obtain an 澳洲幸运5官方开奖结果体彩网:employer 𝓀identification number (EIN) from the IRS. They also determine initial funding from savings, loans, or family and friends. Entrepreneurs follow tax rules depending on their company's structure.

Pros and Cons

The personal benefits of starting a company include income diversification, a strong correlation between effort and reward, creative freedom, and flexibility. Creating a company can also leave a legacy for future generations. A societal benefit is that companies create jobs. If an individual starts a company, the business hires employees, reducing 澳洲幸运5官方开奖结果体彩网:unemployment and bringing wealth into the economy.

Potential drawback𝔉s of starting a company include increased financial responsibility, often long workdays, stress, responsibility for managing employees, and dealing with government regulations and tax issues.

Company vs. Corporation

While all corporations are companies, not all companies are corporations. Common types of corporations include 澳洲幸运5官方开奖结果体彩网:S corporations and 澳洲幸运5官方开奖结果体彩网:C corporations. A corporat𝕴ion is a type of business꧟ that is legally distinct from its owner or owners.

In the case of large, publicly traded corporations, those owners may number into the thousands or even millions of shareholders. Some successful corporations in the United States include Amazon, Apple, McDonald's, Microsoft, and Walmart.

Public vs. Private

Based on legal and regulatory requirements, companies are public or private. Publicly traded companies are held to the strict reporting and regulatory requirements of the 澳洲幸运5官方开奖结果体彩网:U.🦄S. Securities and Exchange Commission (SEC). Under these rules, they must file financial statements and reports annually. This is intended to prevent fraudulent activity and protect investors.

Private companies are held under private ownership, such as by a single person or family. They may have shareholders, but their shares are not traded on an exchange. 澳洲幸运5官方开奖结果体彩网:Private companies vary in structure and size and are not bound by all the regulations and reporting requirements to which 🌄public companies must adhere.

The Bottom Line

A company is a legal entity created by an individual or group of individuals to provide goods or services. Companies range from one-person shops to international corporations🉐. Individuals interestꩲed in starting a company usually begin with a business plan, obtain funding, register their entity, and follow tax rules.