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Reviewed by Jul 18, 2022| Updated on
A company is a legal entity established by a group of individuals engaged in business—commercial or industrial—enterprise and its activity. Here are a few points that should be noted in this definition:
A company is basically an artificial person — also known as corporate personhood— in that it is a separate entity from the individuals who own, run, and support its day to day operations. Companies are generally formed to make a profit from business activities, although some may be classified as non-profit organisations.
A company has the same legal rights and responsibilities as a person does, such as the ability to conclude contracts, the right to sue (or sue), borrow money, pay taxes, purchase and own assets, and hire employees.
The advantages of starting a business include diversification of profits, a positive connection between effort and reward, independence of production, and versatility. The drawbacks of starting a company include increased financial burden, increased legal liability, long working hours, employee and administrative personnel responsibilities, and legislation and tax issues.