Corporation Or Company
Updated on March 19, 2023
A company is a business entity or firm which is engaged in production or exchange of goods or services with customers. The objective or goal of a company is to earn profits. Companies are categorised as per their structure, purpose, tax status along with the area of business.
Types of companies
Companies are classified as:
Sole Proprietorship – the owner and company are the same legally but it allows the owner to show business related expenses on the tax returns.
Partnership – A partnership consists of two or more people with the same business interest. A partnership firm can show business expenses and profit on their personal tax returns.
Limited Liability Company – it comes with limited liability protection with the tax benefits similar to sole proprietorship or partnership firm.
A corporation is a totally separate legal entity from its owners, established with a profit motive and to carry out a business.
Not every company is a corporation, but all corporations are companies.
Features of Corporation
Features of Corporation are:
A corporation sells its stocks or part ownership and raises capital through its investors or ‘shareholders’.
These shareholders are owners of the company as per their share or in proportion to the number of stocks they own.
Most corporations have an elected board of directors to act in the interest of shareholders.
The board of directors selects a management team for running the business operations.
A corporation files tax returns separate from its owners, who are not personally liable for the company’s liabilities.