What is a Company?

A company is a natural legal entity formed by the association and group of people to work together
towards achieving a common objective. It can be a commercial or an industrial enterprise. Different
types of companies are taxed differently; therefore, the taxation of the company defines its type. Some
of the main definitions of the company are as follows;

According to the definition of a company by the Indian Act 2013;

‘‘A registered association which is an artificial legal person, having an independent legal, entity with
perpetual succession, a common seal for its signatures, a common capital comprised of transferable
shares and carrying limited liability.’’

A liability is typically an amount owed by a company to a supplier, bank, lender, or other provider of
goods, services, or loans. Liabilities can be listed under accounts payable, and are credited in the
double entry bookkeeping method of managing accounts.
noun
British
noun: limited liability

1. the condition by which shareholders are legally responsible for the debts of a company only to
the extent of the nominal value of their shares

noun
British
plural noun: limited liability companies

1. a private company whose owners are legally responsible for its debts only to the extent of the
amount of capital they invested.
Translate limited liability companies to

According to the US legal definition;

‘‘A company can be a corporation, partnership, association, joint-stock company, trust fund, or
organized group of persons, whether incorporated or not, and (in official capacity) any receiver, trustee
in bankruptcy, or similar official, or liquidating agent, for any of the foregoing.’’

A corporation is a legal entity that is separate and distinct from its owners. 1 Corporations enjoy
most of the rights and responsibilities that individuals possess: they can enter contracts, loan and
borrow money, sue and be sued, hire employees, own assets, and pay taxes. Some refer to it as a "legal
person."Apr 24, 2020

What Is an Entrepreneur?
An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying
most of the rewards. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods,
services, and business/or procedures.
Entrepreneurs play a key role in any economy, using the skills and initiative necessary to anticipate
needs and bring good new ideas to market. Entrepreneurs who prove to be successful in taking on the
risks of a startup are rewarded with profits, fame, and continued growth opportunities. Those who fail,
suffer losses and become less prevalent in the markets.

What Is a Partnership?
A partnership is a formal arrangement by two or more parties to manage and operate a business and
share its profits

How a Partnership Works

In a broad sense, a partnership can be any endeavor undertaken jointly by multiple parties. The parties
may be governments, non-profits enterprises, businesses, or private individuals. The goals of a
partnership also vary widely.
Within the narrow sense of a for-profit venture undertaken by two or more individuals, there are three
main categories of partnership: general partnership, limited partnership, and limited liability
partnership.

In a general partnership, all parties share legal and financial liability equally. The individuals
are personally responsible for the debts the partnership takes on. Profits are also shared equally. The
specifics of profit sharing will almost certainly be laid out in writing in a partnership agreement
Limited liability partnerships are a common structure for professionals, such as accountants,
lawyers, and architects. This arrangement limits partners' personal liability so that, for example, if one
partner is sued for malpractice, the assets of other partners are not at risk. Some law and accounting
firms make a further distinction between equity partners and salaried partners. The latter is more senior
than associates but does not have an ownership stake. They are generally paid bonuses based on the
firm's profits.

Limited partnerships are a hybrid of general partnerships and limited liability partnerships. At
least one partner must be a general partner, with full personal liability for the partnership's debts. At
least one other is a silent partner whose liability is limited to the amount invested. This silent partner
generally does not participate in the management or day-to-day operation of the partnership.

Finally, the awkwardly-named limited liability limited partnership is a new and relatively
uncommon variety. This is a limited partnership that provides a greater shield from liability for its
general partners.

As nouns the difference between association and partnership

is that association is the act of associating while partnership is the state of being associated with a
partner.

association a group of people who work together in a single organization for a particular purpose:

A joint-stock company is a business entity in which shares of the company's stock can be bought
and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their
shares. Shareholders are able to transfer their shares to others without any effects to the continued
existence of the company.

A joint-stock company is a business owned by its investors, with each investor owning a share based
on the amount of stock purchased. Joint-stock companies are created in order to finance endeavors
that are too expensive for an individual or even a government to fund.
A trust fund is a legal entity that holds property or assets on behalf of another person, group or
organization. It is an estate planning tool that keeps your assets in a trust managed by a neutral third
party, or trustee. A trust fund can include money, property, stock, a business or a combination of these

What Is a Trust Fund?

Danielle Klimashousky Jul 18, 2019
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There are many ways to set up a financially secure future for your loved ones. You could enlist the help
of a financial advisor to come up with a comprehensive financial plan. Trust funds are another way to
set your children or grandchildren up for future financial success. And they aren’t just for the very
wealthy. You can open a trust fund to ensure your loved ones manage and distribute your assets in a
specific way, regardless of your net worth.
What Is a Trust Fund?
A trust fund is a legal entity that holds property or assets on behalf of another person, group or
organization. It is an estate planning tool that keeps your assets in a trust managed by a neutral third
party, or trustee. A trust fund can include money, property, stock, a business or a combination of these.
The trustee holds onto the trust fund until the time comes to pass the assets on to your chosen
recipients.
Trust funds provide for more control and specificity than a will does. This is because when you die,
your will becomes public record and there’s not always a guarantee your wishes will be met. With a
trust fund, only the trustees and the beneficiaries know the contents and conditions of the fund.
Additionally, certain trust funds can protect your assets from legal action and provide tax benefits.

How Does a Trust Fund Work?

There are three parties involved in a trust fund: the grantor, the trustee and the beneficiary. The grantor
is the person who establishes the trust fund and places his or her assets into the fund. The trustee is the
person or institution who holds and manages the assets. Finally, your beneficiary is the person you’ve
chosen to receive the fund’s assets.
To set up a trust fund, the grantor works with a lawyer to create the trust. You can also choose a
financial advisor to work with to help you allocate your assets in the best way. The grantor names the
trustee, often a family member or a financial institution. A grantor must also name the beneficiary like
their children or grandchildren, a business partner or a charity. The grantor and the lawyer also draw up
the terms of the trust fund. The terms include which assets the grantor will include and how they want
those assets to be distributed.
Trust funds differ from other estate planning tools. They enable the grantor to provide specifications for
how and when the beneficiary will receive the trust’s assets. For example, as a grantor, you may choose
to pay out funds annually to the beneficiary or as a lump sum once the beneficiary reaches a certain
age. The grantor can even specify the funds go towards a significant expense like college tuition or a
down payment on a house.
A common inclusion in a trust fund is a “spendthrift clause.” This prevents a beneficiary from using the
trust fund’s assets to pay off their debts. So even if your grandson were to gamble away all his own
money and incur a ton of debt, his creditors can’t touch his trust fund. That way, your grandson can still
have some backup money to help him get back on his feet.
Different Types of Trust Funds

There are a few types of trust funds. For starters, there are irrevocable trust funds which once
established, are unchangeable. As the grantor, you cannot rescind the trust nor change the terms or
distribution. This rigidity comes with some benefits. First, because the grantor no longer owns the
assets, they don’t need to pay income tax on money made by these assets. Funds an irrevocable trust no
longer count as part of the grantor’s estate. Therefore, moving assets into an irrevocable trust can also
help the grantor move into a lower tax bracket or avoid paying estate tax. Irrevocable trusts also protect
funds from legal claims and debts against the grantor. This way, the beneficiary can still benefit from
those assets in the event the grantor falls into debt or hardship.
Revocable trust funds, on the other hand, can be changed at any time. These are also called living
trusts. You can update them as needed by adding or removing assets and beneficiaries. You can even
dissolve the fund which results in returning the assets to the grantor. This allows for more flexibility
and control, as changes can be made until the grantor dies. However, unlike an irrevocable fund, the
funds within a revocable trust are still considered part of the grantor’s estate. This leaves them less
protected if the grantor faces legal claims, medical bills or other debts. In this case, the funds in the
revocable trust can be seized.
A charitable remainder trust is another type of trust fund. Also called a charitable annuity trust, this
allows you to pass on your assets to a specified charity instead of a relative. The assets within this kind
of fund provide a fixed-percentage income for the beneficiary during the life of the trust. When you
fund a charitable remainder trust, you can immediately benefit from charitable-contribution tax credits.
Plus, you’re donating your assets toward a great cause.
Who Needs a Trust Fund?
You’ll find trust funds useful if you want to leave money, property or other assets to someone else and
ensure their use in a specific and incontestable way. You can set up a trust to pay out assets at specific
times, like annually, for specific events like at graduation, or at a certain age. If you want to make sure
your wealth lasts longer, you can choose to have it paid out to your beneficiaries in installments rather
than a lump sum. If you want to pay for your grandchildren’s education, you can have it paid out for
their tuition only.
Trust funds also combat some of the issues you might face with a will. Unlike a will, trusts are not
subject to probate, the legal process that verifies your will. Since the assets in the trust belong to the
trust, not the grantor, there’s no need to transfer ownership of those assets upon the grantor’s death.
Without probate, trusts also keep your estate dealings private.

how is profit distributed in the various form of companies?

What are share and how do they work
what are stocks and how do they work

Type of different companies?

There are 4 main types of business organization: sole proprietorship, partnership, corporation,
and Limited Liability Company, or LLC.

Sole Proprietorship
The simplest and most common form of business ownership, sole proprietorship is a business owned
and run by someone for their own benefit. The business’ existence is entirely dependent on the owner’s
decisions, so when the owner dies, so does the business.
Advantages of sole proprietorship:
• All profits are subject to the owner
• There is very little regulation for proprietorship
• Owners have total flexibility when running the business
• Very few requirements for starting—often only a business license
Disadvantages:
• Owner is 100% liable for business debts
• Equity is limited to the owner’s personal resources
• Ownership of proprietorship is difficult to transfer
• No distinction between personal and business income
Equity represents the value that would be returned to a company's shareholders if all of the
assets were liquidated and all of the company's debts were paid off. We can also think of equity
as a degree of residual ownership in a firm or asset after subtracting all debts associated with
that asset

What is a Corporation?
A corporation is a legal entity created by individuals, stockholders, or shareholders, with the purpose of
operating for profit. Corporations are allowed to enter into contracts, sue and be sued, own assets, remit
federal and state taxes, and borrow money from financial institutions.
The creation of a corporation involves a legal process called incorporation where legal
documents containing the primary purpose of the business, name and location, and the number
of shares and types of stock issued, are drafted.
The process of incorporation gives the business entity a distinct feature that protects its owners from
being personally liable in the event of a lawsuit or legal claim.

What are the Common Types of Corporations?

A corporation can be created by a single shareholder or by multiple shareholders who come together to
pursue a common goal. A corporate can be formed as a for-profit or a not-for-profit entity.
For-profit entities form the majority of corporations, and they are formed to generate revenues and
provide a return to their shareholders, according to their percentage of ownership in the corporation.
Not-for-profit entities operate under the category of charitable organizations, which are dedicated to a
particular social cause such as educational, religious, scientific, or research purposes. Rather than
distribute revenues to shareholders, not-for-profit organizations use their revenues to further their
objectives.

What is a Board of Directors?

A board of directors is essentially a panel of people who are elected to represent shareholders. Every
public company is legally required to install a board of directors; nonprofit organizations and many
private companies – while not required to – also name a board of directors.
The board is responsible for protecting shareholders’ interests, establishing policies for management,
oversight of the corporation or organization, and making decisions about important issues a company
or organization faces.

How Do Corporations Work?

A corporation is required to name a board of directors before it can commence operations, and the
members of the board of directors are elected by shareholders during the annual general meeting. Each
shareholder is entitled to one vote per share, and they are not required to take part in the day-to-day
running of the corporation. However, shareholders are eligible to be elected as members of the board of
directors or executive officers of the corporation.
The board of directors comprises a group of individuals who are elected to represent shareholders.
They are tasked with making decisions on major issues affecting the shareholders, and they also create
policies to guide the management and daily operations of the corporation.
The elected members to the board of directors owe a duty of care to the shareholders, and they must act
in the best interests of the shareholders and the corporation.
Issuing bonds is one way for companies to raise money. A bond functions as a loan between an
investor and a corporation. The investor agrees to give the corporation a certain amount of money for a
specific period of time. In exchange, the investor receives periodic interest payments.

What are the Advantages and Disadvantages of Incorporation?

 

Advantages
• Separate legal entity – Independent from its owners and considered a legal entity that may
conduct business, own properties, enter into binding contracts, borrow money, sue and be sued,
and pay taxes.
• Unlimited life – Stockholders, shareholders, or members are the owners of a corporation, and it
is managed by a board of directors. Their death or inability to perform their duties does not
affect the continuity of this legal entity; only changes in the company’s charter will enable it to
either be extended or liquidated.
• Limited liability – Company owners are only liable for the amount they invested. Creditors and
lenders have no claim to the owners’ personal assets for payments owed by the shareholders.
• Easy transfer of ownership shares – Publicly held corporations do not require approval from
other stockholders to sell the stocks or shares of individual owners. Stocks or shares can be
easily traded in the market, regardless of their volume.
• Competent management – Investors or owners may not directly handle day-to-day business
operations. They vote for the board of directors who eventually hire a professional management
team.
• Source of capital – Corporations can source funds from selling stocks and issuing bonds.
 

Disadvantages
• Incorporation costs – It is costlier to go through the process of incorporation than to form a
sole proprietorship or partnership.
• Double taxation – Two taxes are remitted, from the corporate earnings and from payments of
dividends to shareholders.
• Documentation – Aside from incorporation documents, companies must file annual reports and
tax returns, as well as maintain accounting records, licenses, and other important documents.
 
How Does a Corporation Dissolve?
The life of a corporate entity lasts until there is a change in its charter or the purpose of its existence
has reached its peak. A process called liquidation will serve the transition, facilitated by a liquidator.
The corporate assets will be sold and the proceeds will first go to creditors to pay off debt. Whatever
remains will be given to shareholders. Involuntary liquidation is usually triggered by creditors of an
insolvent or bankrupt company.

An LLC is a hybrid legal entity having certain characteristics of both a corporation and a
partnership or sole proprietorship (depending on how many owners there are) from
wikipedia

An LLC, or Limited Liability Company, combines the best parts of corporations, sole
proprietorships, and partnerships into one business entity offering owners liability protection,
flexible management structure, and certain tax advantages. In this article, you will learn:

What Is an LLC?
LLC stands for "limited liability company." An LLC is one type of legal entity that can be
formed to own and operate a business. LLCs are very popular because they provide the same
limited liability as a corporation, but are easier and cheaper to form and run.
• Who Should Form an LLC?

• What Are the Benefits of an LLC?

• What Are the Disadvantages of an LLC?
• How Do You Start an LLC?
• More LLC FAQs

Who Should Form an LLC?

Any person starting a business, or currently running a business as a sole proprietor, should consider
forming an LLC. This is especially true if you're concerned with limiting your personal legal liability as
much as possible.
LLCs can be used to own and run almost any type of business. However, in some states some types of
professionals must form special professional LLCs. An LLC can be used for a business of any size—
from one-owner operations to businesses with many co-owners. LLCs are also the most common legal
entity used to own rental and commercial property.
Before you start, read "Five Questions to Ask Before Forming an LLC"