A company is a legal structure that exists independently from its owners. It’s a complex business structure that comes with higher set up costs, extra reporting requirements and greater-level legal obligations. It suits people who expect their business income to be variable and want the option of using losses to offset future profits.
A ‘common seal’ (with the company name engraved on it) is used as a substitute for a signature on any document. This gives the company a degree of legal personhood and means it can be sued in its own right. A company can also raise money from investors, which is not possible with some other structures.
Companies contribute to the economic health of a nation as they employ employees and bring disposable income into the economy. They can also have a social impact by helping to create jobs in rural areas. A company is usually organised to earn a profit from its business activities, although some may be structured as nonprofit charities.
Incorporating a company can provide significant benefits, including limiting your personal liability and opening a bank account that is separate from your personal account. Before you start setting up a company, it’s important to understand your options, consider the tax implications and find out if you require an EIN (Employer Identification Number). This 9-digit sequence helps identify your business for federal taxes. You’ll also need to decide whether to incorporate as a corporation or limited liability company, and create an operating agreement. set up a company