Companies

Companies are organizations formed to conduct commercial activities and earn profits. They range from small sole proprietorships to large multinational corporations and can take forms such as sole traders, partnerships, and corporations. A key distinction is that corporations are separate legal entities from their owners, offering limited liability to shareholders; sole proprietorships and most partnerships expose owners to unlimited personal liability.

Public companies have shares traded on stock exchanges, while private companies have restricted ownership and do not offer shares publicly.

Governance typically involves shareholders electing a board of directors who appoint executives to manage daily operations. Financing comes from equity and debt, with growth driven by reinvestment, mergers, acquisitions, or partnerships. Operations are organized into functional areas such as finance, marketing, production or services, and human resources.

Companies operate within a legal framework that includes corporate law, securities regulation, labor, tax and consumer protections, and they may be subject to reporting and auditing requirements and sustainability expectations. They may pursue ethical standards and governance practices appropriate to their jurisdiction. They undergo lifecycle stages from startup to growth and maturity, and may pursue restructurings, spin-offs, or dissolution. Economically, they create jobs and goods, drive innovation, and contribute to productivity, but face risks from market conditions, competition, and governance failures.