Corporation vs Company: Difference and Comparison

In the business world, the words ‘company’ and ‘corporate’ have come to mean the same.


Business Quiz

Test your knowledge about topics related to business

1 / 10

Which of the following speculators expect fall in the prices of securities in the near future?

2 / 10

Whose Liability is limited to the extent of his capital to the firm?

3 / 10

Which country's currency is called the Baht?

4 / 10

Modular furniture __________.

5 / 10

Who takes no active part in Business?

6 / 10

A Company is called an artificial person because _________.

7 / 10

The return of shares to the company is known as ___________.

8 / 10

Who is the servant of the firm with a share in the profits?

9 / 10

Which of the following is not a manufacturing industry?

10 / 10

What is an Economic Activity?

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Key Takeaways

  1. A corporation is a legal entity separate from its owners and can enter into contracts, sue, and be sued.
  2. Company is a general term for any business entity engaged in commercial or industrial activities.
  3. Corporations are a specific type of company created by filing articles of incorporation with the state government.

Corporation vs Company

A corporation is a type of business entity that is legally separate from its owners or shareholders, unlike a company. A corporation is a specific type of legal entity that is separate from its owners, while a company refers to any type of business organization engaged in commercial activities.

Corporation vs Company

A company’s owners are its owners, but on the other hand, the owners of a corporation are the shareholders. A corporation is always a company, but a company may not be a corporation.

Comparison Table

Parameter of comparisonCorporationCompany
DefinitionA corporate is a company that is for large businesses which shareholders own.A company is a corporate body or an incorporated business organization registered under the companies act.
Legal entityOne type of legal entity.It exists only on a paper invisible legal entity.
TypesC corporation and S corporationSole proprietorship, partnership, limited liability company, limited liability partnership or corporation.
OwnersShareholders Members 
organizationIncorporated organizationIncorporated or corporate organization
managementShareholders elect a director that runs and manages activitiesFull control

What is a Corporation?

Corporate is a company that is related to larger businesses and entities. There is no single owner; the shareholders are the owners.

The shareholders elect a director, and the director runs and manages the duties. A corporation is a type of legal entity. There are two types of the corporation: C Corporations and S Corporations.

The difference is how they are perceived by the federal and state income tax. In a C corporation, the taxes are directly paid by the company based on its earnings.

In an S corporation, the earnings are sent to each shareholder and the taxes are paid through their personal income tax. Corporations are always incorporated.

A corporation always has the abbreviation ‘Inc’ in its legal documents. A corporation must always be ‘Inc’ or ‘limited’ to be recognized as a legal entity.

If a shareholder leaves his stake in the company then his absence doesn’t change the running of the company unless he owns a lot of shares. His shares are then bought by others or a new shareholder.

The corporation is more structured and organized than the company. The management doesn’t interfere in the day-to-day activities of the business.

The corporation has a social profit and a capital profit motto. Corporations observe more professionals as it is more significant than a company.

The corporation has several separate departments for all tasks and employees. 


What is a Company?

A company is a business related to a small business or entity. The owners of a company are its members.

The company is a less structured and complex organization than a corporation. A company is an invisible legal entity that only exists on paper.

The company can be either incorporated or corporate. The company doesn’t have a strict department and management.

The employees report to the seniors and executive officers. The owners interfere and help to run daily tasks and business in general.

The employees are professionals as well as freshers and beginners.

The company has a semi-formal relationship between the management and the employees. There are many types of a company, like sole proprietorships, partnerships, Limited Liability Companies, limited liability partnerships or corporations.

I. Sole proprietorship – The sole proprietorship is also called a single-owner business. A single person runs it. There is no distinction between the owner and the business entity. The sole person owns the business. 

Ii. Partnership – A partnership is wherein two or more partners come together to run a business for mutual interests in the profits. The partnership can be between two or more individuals, businesses, social clubs or government, etc.

Iii. Limited Liability Company – This structure exists in the US. It is a private limited company. The business combines the taxes between two partners or sole proprietorships with the limited liability of a corporation.

Iv. Limited Liability Partnership – In this business structure, two o more partners have limited liabilities. It can have the role of both partnership as well as a corporation. The highlight of the LLP is that none of the partners is responsible for the misbehaviour and misconduct of the other partner.


Main Differences Between Corporation and Company

  1. The main difference between corporations and companies is the size. The corporation is a big business or entity, whereas the company is a small one.
  2. The owners of a corporation are the shareholders, whereas the company’s owner is its members.
  3. The corporation is a legal entity, but the company is an invisible legal entity that exists only on paper.
  4. A corporation is more structured and complex than a company.
  5. The management and owners don’t interfere in the business’s daily functions in the corporation. Still, on the other hand, the company owners interfere and run the daily tasks of the business.
  6. More professionals are observed in the corporation as employees than in the company.
  7. The types of corporations are C Corporations and S Corporations, and the types of companies are sole proprietorship, partnership, limited liability corporation, limited liability partnership, and corporation.
  8. The corporation could only be incorporated, but the company can be both incorporated and corporate.
Difference Between Corporation and Company
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