Company vs. Corporation: What’s the Difference?

The main difference between a company and a corporation is that a corporation is a legal entity separate from its owners, providing limited liability, while a company may refer to any form of business organization.

Before we move to more differences, let’s first understand Company and Corporation:

  • Company: A company is a generic term used to describe any business organization or association formed for the purpose of carrying out commercial or industrial activities.
  • Corporation: A corporation, also known as a “limited company” or “incorporated company,” is a specific legal structure that grants the company a separate legal personality from its owners or shareholders.

Now, let’s get to Company vs Corporation:

Major differences between Company and Corporation

Company Corporation
Companies can be privately owned by individuals or a group of individuals who manage and control the business. Corporations issue shares of stock, allowing ownership to be divided among multiple shareholders, who elect a board of directors to oversee the company’s operations.
Companies are often considered an extension of their owners and are not separate legal entities. Corporations are separate legal entities distinct from their shareholders, granting them legal rights and responsibilities.
In most cases, the owners of a company have unlimited liability, meaning they are personally responsible for the company’s debts and obligations. Shareholders in a corporation have limited liability, meaning their personal assets are protected, and they are only liable for the amount they have invested in the company.
The owners or managers of a company are responsible for decision-making, and the structure can be more flexible and less bureaucratic. Corporations operate under a strict governance structure, where a board of directors is elected to make major decisions and oversee the company’s management.
The income generated by a company is generally taxed at the individual level, depending on the legal structure (partnership, sole proprietorship, etc.). Corporations are subject to corporate tax rates, and shareholders may also face taxes on dividends received.

So, these are the main differences between the entities.

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