Corporation (or Company)

A corporation (or company) is the most expensive way to organize a business. Corporations issue stock in shares, which are certificates of owning part of the cor­poration's capital. Shares certify that a definite sum of money has been invested by a stockholder (or shareholder), who may own one or many shares, and that he or she has the right to definite annual dividends. Stockholders also have the right to attend the stockholders' meetings, which are nominally the supreme governing body of a corporation. Corporations, or companies, may be public, with an unlimited number of stockholders, and with stocks being traded freely at the stock exchange by brokers. The stock exchange is a place where stocks are bought and sold. A corporation can also be owned privately (private company). In that case, it has a limited number of stockholders, and shares arе not sold by brokers at the stock exchange; only stock­holders themselves can sell them.

Setting up a corporation is a long and difficult process, beginning with issuing stock and organizing a subscription. Legal registration must be completed, by which the com­pany receives authorization to open up business as a corporation. Corporations, how­ever, can raise the greatest amount of investment capital because an unlimited number of shares can be sold. Stockholders own the corporation, but they do not necessarily work in it (though some of them certainly may). They do not even need to run the cor­poration. It is run by directors or managers (executives) who often are not stockholders themselves, but are employed by the corporation. Those stockholders who hold more shares have more votes at the annual stockholders' meeting and can have a greater influ­ence on decisions taken.

Corporations have great advantages that make them the strongest and most powerful form of business, ensuring the greatest profits.

Sole Proprietorships

From a legal point of view, there are two simplest ways of organizing a business.

The first is sole proprietorship, sometimes called single proprietorship, or individual proprietorship (in American English). It is the simplest and the cheapest method of starting a business, because a sole proprietor invests his or her own capital and personal assets (anything that belongs to the person), or gets a loan from a bank. He or she alone decide» what he or she will do to achieve the objective of any business - profit.

So, to start a sole proprietorship, you only require the capital to invest and, of course, knowledge of the local laws.

Partnerships

The second simple form of business organization is a partnership. In a partnership, no less than two, and no more than twenty people (according to British law) pool their property, capital (including intellectual capital), efforts, and managerial talents to do business and gain profits. The co-owners make a written agreement regarding how to invest capital and share dividends, called an Agreement on Capital and Dividends Share. They also write a Statute of their partnership where all the rights and duties of co-owners are regulated. The Statute is al legal document, and its contents arc regulated by law. At least one of the partners has unlimited liability, but quite often every co-owner is liable for all the debts of the partnership.