What’s the difference between a business and a corporation?
In: Economics
A business is a term that can apply to any commercial enterprise, from a family owned restaurant to a multi billion dollar global company.
A corporation is a specific legal term, where the company is separate to the individuals running it. Incorporating a business protects it from certain types of litigation. All the big companies we think of are corporations.
There are 3 main ways a business can run.
Sole Proprietor: I am the owner of the business. I am personally responsible for everything the business does. If the business takes out a loan, actually I as the owner took out the loan. If the business fails to pay the loan, I as the owner owe the bank, and they can take my shit.
Partnership: similar to above. I and a few other people agree to run the business. If the business takes out a loan, we *all* took out the loan together, and we all owe it.
Corporation: I have done some special paperwork. Now the business is registered as a distinct legal thing, separate from me. I can take out a loan for the business and the loan is in the *corporation’s name*, not mine. If the corporation doesn’t pay the loan, *I* am safe. The corporation owes the money, not me.
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