Companies 101 James Hoffmann

Companies A company is a business or association formed to manufacture or supply products or services for profit. A company is a business or association formed to manufacture or supply products or services for profit. Can be: Can be: Proprietorship Proprietorship Partnership Partnership Corporation Corporation Corporation is set up in accordance with government regulations. Corporation is set up in accordance with government regulations. Limits liability of its owners Limits liability of its owners Proprietorship or Partnership has owners who share: Proprietorship or Partnership has owners who share: Profits of the business they have invested in Profits of the business they have invested in Losses of the business they have invested in Losses of the business they have invested in All are liable for all debts All are liable for all debts

Corporations Corporations are companies legally separate from its stockholders and managers. Corporations are companies legally separate from its stockholders and managers. Can be held: Can be held: Privately Privately Publicly Publicly Public Corporation Advantages: Public Corporation Advantages: Limited liability means stockholders’ responsibility for company’s debts is limited to their stock investment Limited liability means stockholders’ responsibility for company’s debts is limited to their stock investment Long life means a corporation exists even if its stockholders or managers change Long life means a corporation exists even if its stockholders or managers change Easily transferable ownership means that stockholders can easily sell ownership shares in Stock Market Easily transferable ownership means that stockholders can easily sell ownership shares in Stock Market Private Corporation Advantages: Private Corporation Advantages: Limited liability means stockholders’ responsibility for company’s debts is limited to their stock investment Limited liability means stockholders’ responsibility for company’s debts is limited to their stock investment Long life means a corporation exists even if its stockholders or managers change Long life means a corporation exists even if its stockholders or managers change Can issue stock which can only be sold directly to individuals or other corporations Can issue stock which can only be sold directly to individuals or other corporations Not subject to the stringent disclosure requirements imposed on public corporations Not subject to the stringent disclosure requirements imposed on public corporations

Vocabulary Company- A business or association usually formed to manufacture or supply products or services for profit. Company- A business or association usually formed to manufacture or supply products or services for profit. Corporation- A company legally separate from stockholders who own it and the managers who run it. Corporation- A company legally separate from stockholders who own it and the managers who run it. Entrepreneur- A person who organizes, operates, and assumes the risk for a business venture. Entrepreneur- A person who organizes, operates, and assumes the risk for a business venture. Partnership- A company owned and managed by two or more people who share its profits and losses. A partnership is not separate from its owners, who are liable for the company’s debts. Partnership- A company owned and managed by two or more people who share its profits and losses. A partnership is not separate from its owners, who are liable for the company’s debts. Private Corporation- A corporation that doesn’t sell shares to the public. You can’t buy shares of a private company in the Stock Market. Private Corporation- A corporation that doesn’t sell shares to the public. You can’t buy shares of a private company in the Stock Market. Public Corporation- The stock of a public company is owned and traded by individual and institutional investors. In contrast, the stock is held by company founders, employees, and sometimes venture capitalists. Public Corporation- The stock of a public company is owned and traded by individual and institutional investors. In contrast, the stock is held by company founders, employees, and sometimes venture capitalists. Sole Proprietorship- A company owned and run by one individual who receives its profits or bears its losses. A proprietorship is not separate from its owner, who is liable for the company debts. Sole Proprietorship- A company owned and run by one individual who receives its profits or bears its losses. A proprietorship is not separate from its owner, who is liable for the company debts.

Vocabulary Review Company Business or association usually formed to manufacture or supply products or services for profit. Corporation Company legally separate from stockholders who own it and the managers who run it. Entrepreneur Person who organizes, operates, and assumes the risk for a business venture. Partnership Company owned and managed by two or more people who share its profits and losses. A partnership is not separate from its owners, who are liable for the company’s debts. Private Corporation Corporation that doesn’t sell shares to the public. You can’t buy shares of a private company in the Stock Market. Public Corporation The stock of a public company is owned and traded by individual and institutional investors. In contrast, the stock is held by company founders, employees, and sometimes venture capitalists. Sole Proprietorship Company owned and run by one individual who receives its profits or bears its losses. A proprietorship is not separate from its owner, who is liable for the company debts.