Company is a term that is usually used to refer to an enterprise, which has a legal personality. It is a legal entity established for business purposes. A company is an association of several persons or other companies, which together have a combined capital. Legal personality of companies in each country varies and is always limited by legislation. A company is always based in a particular state. There are differences between European law, the law in the UK, USA and other countries. Basic types of companies have approximately the same characteristics around the world. The basic types of companies include:
- Sole Proprietorship - the activity is carried out independently by an entrepreneur in his own name and on his own responsibility to achieve a profit
- Personal companies in which shareholders warrants all its assets
- Limited share companies (by shares or other ownership interest) - also sometimes referred to as capital companies, corporations - for these types of companies, each of the shareholders has limited liability to the extent of which they own (such as a limited liability company or joint stock company)
Use of the company in practice: The company type is always selected according to the nature of business, size of the enterprise and in accordance with the legislation of the state concerned. It affects the obligations towards all stakeholders, in particular obligations to the state and other potential regulators. The type of company also depends on the method of accounting, tax payment, but also the way the organization and scope of responsibilities of top managers. (Note: in some types of companies, especially the Anglo-Saxon countries are more intertwined role of managers and owners). Internationally the most common type of company is a joint stock company.