CORPORATE AND INDIVIDUAL-OWNED BUSINESSES

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Introduction

A corporation is an organization that acts as a single and legal entity, distinct from its owners, as authorized by the nation within which it is located, and it is recognized in that manner in-laws for certain purposes. Corporations enjoy responsibilities and rights just like individuals; for example, they can borrow money, loan, enter contracts, sue, be sued, hire employees, and pay taxes, among other rights and responsibilities. On the other hand, an individually owned business is a business that is free from any control from an outside party, a privately owned establishment; and examples include family businesses, small and medium-sized companies, and sole proprietorships. The two businesses are quite different from each other, starting from their management, ownership, capital sources, and legal formations. Below is a discussion of their differences and a summary of corporate power’s internal and external dimensions.

Differences between Corporations and Individually owned Businesses

First, corporations and individually owned businesses have a difference in raising funds for their programs, services, and sustainability. Corporations get finances by selling bonds or stock to increase their stock whereby the company gets listed, the investors get in and out of stock by selling, and the trades on the stock exchange are shared. On the other hand, individually owned businesses turn to private funding to raise their funds, application for government grants, bank loans, and personal investments, among others (Stulz, 2020).

The management of a corporation is by the board of directors who approve the business’s major decisions. In contrast, the management of individually owned businesses is the owner, whereby they are responsible for all business decisions. In the corporation, the board of directors is elected by the shareholders, just representatives in a congress. They have a limited-term to serve the company as they control and oversee the entire organization. However, the individually owned business has the owner making decisions for himself for the growth and development of the company (Sreih, 2019).

Shareholders can remove the directors from taking control of the corporations’ running due to specific reasons by the corporation’s policies. At the same time, the individually owned businesses have nobody impeaching the owner from his leadership. If the corporation’s shareholders wish to remove a director, they do so by passing a resolution, then follow the procedure of the removal by their policies.

A corporation has to follow the state’s reporting requirements, for it should be accountable to the state. In contrast, the individually owned company has no such pressure for the owner is accountable for himself or herself. A state could be regulating reporting requirements like filing quarterly reports or annual reports, or other types of disclosure documents that the corporation has to adhere to. However, the individually owned companies, if they decide not to account for anything, it’s up to the owner, and the government will not be on their neck for the disclosure documents (Hauska, 2019).

Summary of Internal and External Dimensions of Corporate Power

            Companies have the responsibility of making the world a better place than it is. That concept is brought up by the corporate contribution of providing employment opportunities and ensuring the shareholders earn profits. Corporate power comes with many aspects, including the environmental dimension of CSR, Economics ad CSR, social awareness in business operations, the importance of corporate governance, and other components of corporate social responsibility programs (Vollero, 2020). Kean Birth divides corporate power as internal and external; internal corporate power relates to the owner or runs the corporation, and external corporate power as the forma and agents of corporate power (Birch, 2017).

Having in it the ownership of the corporation, the internal corporate power has the shareholders and the other leaders in it; the board of directors and the executive team. No one owns corporations; in such a way, the corporation’s assets are for the corporation itself; however, there are the shareholders who own the shares in the corporation’s assets. Legal forms drive the relationship between the shareholders and management despite it being complex. The stakeholders elect the board of Directors, who elect the executive office that includes the CEO and other heads, and the executive office leads the corporation to divisional management. In the whole election process, some auditors assist in execution and auditing.

The external corporate power is focused on how the corporation shapes society through its various activities and programs. Corporations are putting into use Corporate Social Responsibility, an international private business that aims to give the best contribution to society’s goals, which could be charitable, thus volunteering in ethical practices.

Conclusion

In conclusion, both individually owned businesses and corporations are good for society since they all impact society in the same way, mainly by providing employment opportunities. They may be different in various ways, but all give similar societal impacts despite the various challenges they undergo. Yes, there are more advantages to running a corporation over an individually owned business, especially at the start, with minimal risks incurred by the corporations, but that does not mean individually owned businesses cannot be sustained and bring profits to the table all businesses.

References

Birch, K. (2017). Business and Society: A Critical Introduction. Business and Economics, 87-100.

Hauska, L. (2019). Sustainable Development Goals as a Guideline for Multinational Corporations. Emerging Market Multinationals and Europe, 159-176.

Sreih, J. F. (2019). Differences in Management Styles, Levels of Profitability, and Performance Across Generations, and the Development of the Family Business Success Model. Journal of Organizational Change Management 32(1).

Stulz, R. M. (2020). Public Versus Private Equity. Oxford Review of Economic Policy 36 (2), 275-290.

Vollero, A. (2020). Hofstede’s Cultural Dimensions and Corporate Social Responsibility in Online Communication: Are they Independent Constructs? Corporate Social Responsibility and Environmental Management 27 (1), 53-64.