COMPANY

A company is a legal entity formed to engage in business activities, such as producing goods or delivering services. It can be for-profit or nonprofit, and the term is often used interchangeably with firm or business, though legal definitions and implications vary by jurisdiction.

Companies are created by registering with government authorities and filing foundational documents such as articles of incorporation or memorandum of association and bylaws. Common forms include sole proprietorships, partnerships, corporations, limited liability companies (LLCs), and cooperatives, each with different liability, taxation, and governance rules.

Liability and governance differ by form. Corporations and many LLCs provide limited liability to owners, while sole proprietorships and general partnerships expose personal assets to business debts. Governance ranges from single-owner control to boards of directors elected by shareholders, with management teams responsible for day-to-day operations.

Capital is raised through equity or debt. Tax treatment varies by form and jurisdiction; corporations may face corporate income tax and possible double taxation on profits distributed to shareholders, whereas partnerships and some LLCs typically provide pass-through taxation.

Lifecycle trajectories include growth, mergers and acquisitions, restructuring, or dissolution. Regulations governing competition, labor, environment, consumer protection, and financial reporting shape operations. The size and scope of a company influence access to capital, governance complexity, and risk management needs.

Ownership and terminology vary by country. Small and medium-sized enterprises (SMEs) are the common business form in many economies, while large multinational corporations operate across borders. Nonprofit entities may also be organized as companies, pursuing missions rather than profits.