Types of Corporations
Although a corporation refers to a very specific type of business, there are actually many different types of corporations in America. There are three main ways to classify the type of corporation. For example:
- Profit vs. Non-profit
- Public or Closely Held
- Mutual Benefit Corporation
Profit vs. Non-Profit
Although the stereotype for corporations is large, greedy, money making companies, there are is a surprisingly large number of non-profit corporations. Non-profit corporations obviously are not in business to make money, but large amounts of money still pass through their accounts every year. They may have lots of money in their accounts, but the expenditure of money needs to be about equal for them to be considered a non-profit organization.
Public or Closely Held
When a corporation “goes public” it means that the shares are actually traded in the open market and are not all owned by the board of directors. This means that there are more people involved in the company, and more people to keep happy. There are advantages to both, though the risks are great when shares are traded on the markets.
Mutual Benefit Corporation
A mutual benefit corporation is a corporation that is purely created to benefit those board members of the company. While this may be said of many companies, some companies do spread the wealth between the members of the board, the employees, and the share holders.
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