A business is defined in the Merriam Webster’s Collegiate Dictionary Tenth Addition as: a private institution having one or more businesses, where products or services are sold or made by owners or others acting as representatives or agents. A business may also be defined as a corporation, partnership, association or any kind of combination of individuals or corporations operating for the purpose, either individually or collectively, to conduct trade. In addition, a business may also be defined as the principal agent in a transaction. In business, a company refers to any legal or unincorporated organization owning, conducting, managing, and operating a definite enterprise. A company may also refer to the members of a partnership.
There are two basic types of corporations: publicly held and privately owned. A publicly held corporation is controlled by its stock holders; a privately owned corporation is controlled by its shareholders only. Most U.S. states have laws limiting the rights of corporations to limit their share holders. In general, a corporation is established for the benefit of all its shareholders. This benefit is often referred to as equity.
A corporation is generally considered to be a separate legal entity from the people or individuals who own it. A corporation may be formed in one state and operated entirely in another. Most privately held corporations are domiciled in the state in which they conduct their business. There are three types of corporations in the United States: C corporations, D-corporations, and S-corporations. A C corporation is any company that meets the definitions of a public corporation and all of the requirements of the law and does not carry on business in the same way as other companies.
A corporation is usually classified according to its nature. Public corporations are those established by the state in which they reside. Private corporations are those managed by owners of the enterprise. In most cases, a partnership is considered a corporation in its own right, and a sole proprietorship is considered to be a partnership in its own right. Many businesses are classified under these broad classifications.
Each of these three classifications is designed to restrict or limit the liability of a corporation. For example, a partnership is a combination of individuals who own shares in the business. The partnership is a separate legal entity from its individual owners and therefore has limited liability. A corporation is an individual sole proprietorship and can have joint or multiple owners. It is important that any entity be considered a corporation whether it has a shareholders’ meeting, is publicly traded, or is owned by one or several members.
All publicly traded corporations should have a board of directors meeting at least annually and a management company in place to manage the business affairs. If a privately owned corporation is owned by more than one shareholder, each shareholder will have control over a portion of the company. If a corporation is in the form of a partnership, there will only be a single Board of Directors and Management Company with all shareholders owning a part of the company.