What Is a Common Enterprise?

A company-owned enterprise refers to an economic organization established by an investor (or shareholder) with a quorum or greater in accordance with legal regulations, self-employed, self-financing, and having legal personality. There are two forms of limited liability companies and joint stock companies in China's current corporate enterprises. When the company adopts a corporate organization, the owner of ownership and the owner of management rights are separated. The owner only participates in and makes financial decisions about changes in owner's equity or capital rights. The daily production and management activities and financial management activities are carried out by the operator decision making. ^[1]

Corporation

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A company-owned enterprise refers to an economic organization established by an investor (or shareholder) with a quorum or greater in accordance with legal regulations, self-employed, self-financing, and having legal personality. There are two forms of limited liability companies and joint stock companies in China's current corporate enterprises. When the company adopts a corporate organization, the owner of ownership and the owner of management rights are separated. The owner only participates in and makes financial decisions about changes in owner's equity or capital rights. The daily production and management activities and financial management activities are carried out by the operator decision making. ^[1]

According to Professor Fang Liufang's research, the company was once called the "Public Class", which is an exclusive title for the British East India Company. In the history of more than 100 years, the meaning of the word "company" in Chinese has been gradually cleared into its present meaning through constant misunderstanding and reinterpretation.

The difference between a sole proprietorship, a partnership, and a corporation

Advantages of a corporation

Unlimited existence

A company can continue to exist after the original owner and operator exits.

Limited liability

Corporate debt is the debt of the legal person, not the debt of the owner. The debt liability of the owner is limited to the amount of its contribution.

3. Strong liquidity of ownership

4. The superior position of the capital market

Disadvantages of corporations

Double taxation

As an independent legal person, the company's profits are subject to corporate income tax. After the corporate profits are distributed to shareholders, the shareholders also need to pay personal income tax.

2. The cost of setting up a company is high

The requirements of company law for establishing a company are higher than for a sole proprietorship or partnership, and various reports are required.

3. There is a proxy problem

After the operator is separated from the owner, the operator is called the agent and the owner is called the client. The agent may harm the client's interests for his own benefit.