What is the difference between Company and Inc. (eg. caterpillar Inc.)?
Answer:
In law, a company refers to a legal entity formed which has a separate legal identity from its members, and is ordinarily incorporated to undertake commercial business. Although some jurisdictions refer to unincorporated entities as companies, in most jurisdictions the term refers only to incorporated entities. It has been judicially remarked that "the word company has no strictly legal meaning",[1] but is taken to mean a specific form of entity created under the laws of the relevant jurisdiction. Because of the limited liability of the members of the company for the company's debts and the separate personality and tax treatment of the company, it has become the most popular form of business vehicle in most countries in the world.
Lacking a concise definition of their own, companies are often defined by reference to what they are not.
Incorporation (abbreviated Inc. in U.S. business names) is the forming of a new corporation. The corporation may be a business, a non-profit organization or even a government of a new city or town.
Legal benefits
* Protection of personal assets. Safeguarding personal assets against the claims of creditors and lawsuits. Sole proprietors and general partners in a partnership are personally and jointly responsible for all the liabilities of a business such as loans, accounts payable, and legal judgements. In a corporation, however, stockholders, directors and officers typically are not liable for their company's debts and obligations. They are limited in liability to the amount they have invested in the corporation (eg: If $100 in stock was purchased, no more than $100 can be lost). Corporations and Limited Liability Companies (LLCs) may also hold personal assets like houses, cars or boats. If one is personally involved in a lawsuit or bankruptcy, these assets may be protected. A creditor of the owner of a corporation or LLC cannot seize the assets of the company, however, they can seize their ownership shares in the corporation, as that is considered a personal asset.
* Transferable ownership. Ownership in a corporation or LLC is easily transferable to others, either in whole or in part. Some states' laws are particularly attractive to this end. For example, with a Delaware Corporation, the transfer of ownership in a corporation is not required to be filed or recorded.
* Retirement funds. Retirement funds and qualified retirement plans (like 401ks) may be set up more easily with a corporation. Corporations can also fully deduct the cost of paying its owner's health insurance.
* Taxation. In the United States, corporations are taxed at a lower rate than individuals. Also, they can own shares in other corporations and receive corporate dividends 80% tax-free. There are no limits on the amount of losses a corporation may carry forward to subsequent tax years. A sole proprietorship, on the other hand, cannot claim a capital loss greater than $3,000 unless the owner has offsetting capital gains.
* Raising funds through sale of stock. Capital from investors can be raised for corporations easily through the sale of stock.
* Durability. A corporation is capable of continuing indefinitely. Its existence is not affected by the death of shareholders, directors, or officers of the corporation.
* Credit rating. Regardless of an owner's personal credit scores, corporations acquire their own credit rating, and build a separate credit history by applying for and using corporate credit.
There are several kinds of company structure in the US:
1. A sole proprietorship is a business which legally has no separate existence from its owner. All debts of the business are debts of the owner. The owner has no partners and does not pay corporate taxes but pays personal income taxes on the profits.
2. A General partnership is an association of persons or an unincorporated company with the following major main features:
A] formed by two or more persons;
B] owners are all liable for all debts of the company.
3. A corporation is a legal entity which exists completely separately from the people who run it. Members of a corporation have "limited" liability for the corporation's debts and obligations. The assets and structure of the corporation exist beyond the lifetime of any of its members.
Inc = incorporated = legally a corporation
The answers post by the user, for information only, BAnswer.com does not guarantee the right.
Other Questions and Answers: