By legal and business definitions, a company is a business enterprise, often times engaged in an industrial or commercial enterprise, a group of people associated through a common goal or financial objective. Companies vary in types, depending on the services offered and the laws governing such financial institutions.
Different types of companies:
This type of company provides long-term or short-term loans to their clients. They profit through the loans’ interests, but first makes sure that the individual asking for the loan is in good credit standing.
This company’s sole purpose is to own stocks of other companies, therefore giving it the freedom to control management and other investments. Already considered a corporation, a holding company offers no products or services, and often provides added security and financing to its companies.
Companies that exceed average growth in its field, and even the over-all economic rate of the country due to high sales and income return are often classified under this type.
This is a financial institution that earns income by holding and investing in securities issued by various companies or by government agencies, as well as sell shares to interested individuals.
Limited liability company
This is considered a state of legal entity, as well as being a financial institution. It is also defined as a corporate structure where those who own stocks and shares have limited liability where the company’s activities are concerned.
This type of company has been made possible to establish only recently, having existed before in German-speaking countries.
English-speaking countries have followed suit because of the advantages of a partnership structure and not being double-taxed as traditional structures dictate that a company be taxed once for income, then twice for distribution of dividends.
But even as this type of company has a lot of advantages in terms of flexibility, it also has it disadvantages one being that there are less people who are willing to invest, as this type of company is somewhat non-traditional.
This is defined as a company that pools together its members’ funds for capital, where transferable shares represent ownership interest. In relation, a member’s share correlates to his power or control over the company, but also makes him equally liable to company debts and actions.
Also referred to as a co-operative, this is considered to be a private company, and is comprised of, and owned by, its customers. The common goal is to raise funds from the members, which will then be used by the same group of people through various services.
There are also several functions that are similar to those of a bank’s, only that members can loan from their mutual company with lower interests and a more flexible payment scheme. This kind of company is also commonly seen in the insurance industry, such that the finances of the company heavily rely on its exposure and membership.
Most often in partnership with a bank, this kind of company engages in being a trustee in handling trust funds and financial planning for individuals or estates at a custodian level.