A private company can legally make good people

Company - what is a company?

Companies are economically independent organizational units that are subject to a corporate purpose or goal.

Do you want to start your own business? In our article you will find out which type of company is most suitable for you.

A company is understood to be an economic, financial and legal unit that pursues a specific purpose or goal. For companies in the private sector, this goal is mostly profit maximization.

The electronic Federal Gazette (eBAnz) summarizes all entries in the commercial register as well as legally required publications of annual financial statements and company filing notices. In comparison, the business register is the official directory of companies in a confederation or in a state.

The commercial register serves as a public directory in the Federal Republic of Germany. This keeps entries about the registered merchants in the district of the competent registry court. Every registered company receives an extract from the commercial register.

Company vs. company, group and operation

The terms company, company, group and company are often confused with one another. It is therefore important to make a distinction between definitions.

In business administration, company and company are mostly used synonymously. Operation is also used as a generic term for private and public companies.

In law, too, there are different definitions of company and company. For example, commercial law sees the company as a technical and organizational unit, while the company as a legal unit.

The distinction between company and group is clearer. A group defines the merger of several independent companies with common management.

Company, on the other hand, is the name under which a businessman conducts his business. A company can be a company at the same time, if the merchant status is fulfilled.

Private law vs. public law companies

Companies can be differentiated according to their legal form.

Private companies are companies that are privately owned. Here the goal of profit maximization is in the foreground.

Public corporations, on the other hand, are owned by the state. Public companies are subject to a "public purpose" and may not serve exclusively or predominantly to maximize profits.

Legal forms of private companies

In Germany there are a number of different legal forms that a company under private law can adopt, roughly subdivided according to:

The individual forms of corporations are explained in more detail below.

one-man business

The sole proprietorship is one of the most common forms of business. A sole proprietorship can be founded informally and easily by any natural person - no minimum capital is required.

A sole trader conducts the business under his name and at his own risk. With his private assets he is liable for all debts of his company. So there is no distinction between private assets and business assets.

Partnership

A partnership is understood to be the amalgamation of several people under a common corporate goal. Partners in a partnership can be both natural and legal persons. Unlike in the case of corporations, a capital contribution is not absolutely necessary.

As with sole proprietorships, the partners of a partnership are usually personally and unreservedly liable. However, there is an exception for the limited partner of the limited partnership (KG), the GmbH & Co. OHG and the GmbH & Co. KG - his liability is limited to the capital contribution.

Partnerships at a glance:

Corporation

Similar to a partnership, a corporation defines itself as an amalgamation of several people to achieve a common goal. However, a capital contribution is required for every form of corporation.

In contrast to a partnership, the partners of a corporation are only liable with the company's assets. This has to do with the fact that corporations are regarded as separate legal entities.

Corporations at a glance:

Other legal forms under private law

In addition to sole proprietorships, partnerships and corporations, there are other legal forms under private law:

  • Cooperatives
  • Corporations under private law (associations)
  • Mutual insurance companies

Legal forms of public companies

Public companies can also take on different legal forms:

  • Companies with their own legal personality
  • Companies without their own legal personality

The most common public-law companies - establishment, foundation - are among the companies with their own legal personality:

Companies with their own legal personality

Public law companies that are also a legal person have their own legal personality. They usually perform special tasks.

Companies with their own legal personality are:

  • Public corporations (e.g. Reconstruction Loan Corporation)
  • Institutions under public law (e.g. broadcasting)
  • Public law foundations (e.g. Prussian Cultural Heritage Foundation)

Companies without their own legal personality

Public law companies without their own legal personality are:

  • Regions (e.g. theaters, libraries)
  • Own operations

Company forms according to further criteria

However, companies cannot only be structured according to their legal form. Size, industry and phase also play a role.

Company form by size

One way of differentiating between companies is by size class into small and large companies. There are also medium-sized companies. In legal regulations (Section 267 of the German Commercial Code), a combination of sales, number of employees and total assets is often used to measure size.

Company form by industry

Another common distinction between companies relates to their industry. A distinction can be made between the following sectors, for example:

  • trade
  • Hospitality
  • information and communication
  • Education and instruction
  • Arts, entertainment and recreation
  • Etc.

Company form by phase

A company usually goes through different phases - the companies are broken down into phases as follows:

Establishment phase - sales phase - dissolution phase

Company form according to spatial structure

Finally, companies can also be differentiated according to their spatial structure.

A distinction is made between regional, national and international companies.

A management consultancy helps to increase the company's sales and success.