What does the term Business really mean? It can mean different things to different people. The dictionary definition of business is “a business concern organized for the purpose and benefit of the entrepreneur”. This means that a business can be both publicly or privately owned and operated for the benefit of its owners. It is an institution that facilitates the conduct of business transactions by conducting business affairs in a regular and systematic manner. The central purpose of any business organization is to bring together persons to perform productive and financially rewarding activities.
A corporation is merely a legally separate legal entity from its shareholders. A corporation can be organized either publicly or privately. In a publicly held corporation, the officers and employees of the corporation to exercise majority control over the corporate assets and liabilities. Under such a system, there is no limit on the number of shareholders a corporation may have. In a privately held company, the directors of the corporation to exercise power and control over the assets and liabilities of the company.
There are two types of corporations: corporations that are publicly held and corporations that are privately held. A corporation that is publicly held is actually a partnership that has shares listed in a stock exchange. A corporation that is privately held is controlled and operated by the owners. These types of businesses are distinct from partnerships which are independently owned and operated by various partners.
Business enterprises in the stock market are normally classified as either partnerships or corporations. Many businesses today combine the functions of both partnerships and corporations. Many businesses conduct both types of ventures. A partnership is usually composed of two or more individuals.
The most familiar example of a partnership is a limited liability company or LLC. Such entities can be created for the benefit of all investors or by one person or group. Limited Liability Company is a business structure where the owner or owners are liable for the debts and obligations of the parent company. There are also some other kinds of partnerships including venture capitalists, life insurance companies, property management companies, and professional services firms. Many private companies are listed on the stock market or traded in the pink sheets.
Examples of publicly traded corporations are partnerships, pass-through entities, and limited liability partnerships. Examples of privately owned enterprises are sole proprietorships, partnerships, and corporations. The IRS treats all of these entities the same and treats them all as partnerships if they have outstanding debts or liabilities that prevent them from being treated separately.