What is the Difference Between Corporation and Company?

Both corporations and companies are types of business organisations. They have a different legal entity status that is separate from their owners and exist as artificial legal persons.

Both company and corporation are created after the actual legal procedure. They can both own things in their names, including real estate.

The main difference between corporation and company is that companies can pass their earnings or losses onto an individual’s tax return.  In contrast, corporations often have their profits taxed twice.

Let’s learn the basic difference between corporation and company:

What is a Company?

What Is A Company

Any entity involved in a business is known as a company. A broad phrase without official recognition, limitations, or authorization is “company.” Although not all firms are corporations, a corporation is usually a company.

Companies can be organised in a variety of ways. Your business can be a sole proprietorship, a partnership, or a corporation, for instance.

Depending on the type of business you’re working with, it may be owned by a single individual or many individuals.  In most business forms, the owners are responsible for any liabilities, which may be limited or infinite.

Types Of Company

Types Of Company

Different types of companies include:

1. Sole Proprietorship

A sole proprietorship is a well-liked business structure and is best for small enterprises, especially in the early stages of development.

A sole proprietorship is a business organisation where all risks and earnings are carried by one person who owns, manages, and controls the business. Proprietor refers to “owner,” while “sole” means “only.”  As a result, a sole proprietor is the only company owner.

2. General Partnership

Each partner’s liability in a general partnership is limitless. Unless otherwise stated in the deed, they have an equal share.

If the firm’s assets are insufficient to pay off its debts, it may seize the partners’ personal property. Except when the other partners agree differently, each partner of a general partnership is allowed to participate in the management of the business actively.

3. Limited Liability Company (LLC)

A limited liability company (LLC) offers business owners the tax advantages of a sole proprietorship or partnership with the liability protection provided by a corporation.

What is a Corporation?

What Is A Corporation

A corporation is a fictional, paper-based entity (or, in concept, from an academic viewpoint).

It must continuously operate through agents, who could be directors, officials, or title holders, because it cannot act independently. A corporation can be ceased but never actually dies.

Corporations vary from other business entities in that their existence is distinct from that of their legal owners. That implies that liability is also distinct. Liability in corporations is restricted to shareholding.

A key difference between corporation and company is shareholding. Each shareholder in a corporation owns a small portion of the greater corporate structure.

Types Of Corporations

Types Of Corporations

Different types of corporations include:

1. C- Corporation

The most popular type of formation for enterprises, the C Corporation, includes practically all of a corporation’s characteristics. While the corporation is taxed as a business entity, owners who receive earnings are taxed individually.

The shareholders and owners can handle the C corporation differently. Its earnings are initially subject to corporate tax.

2. S- Corporation

S Corporations are formed similarly to C Corporations. However, they have different owner restrictions and tax implications.

An S Corporation can have up to 100 shareholders and is not taxed separately.

Instead, the shareholders must report the profits and losses on their individual income tax returns.

Learn more: What is the Difference Between Corporate and Business?

Difference Between Corporation and Company

The basic difference between corporation and company are given below:

The primary difference between corporation and company is that a corporation is a legal body established under state law. On the other hand, any organised business activity can be referred to as a company.

In actuality, another crucial difference between a company and a corporation is shareholding.

Each shareholder in a corporation owns a small portion of the greater corporate structure.

While companies can be held by thousands of different people, most businesses are typically controlled by one or a small group of people.

A company, such as a manufacturing or investment company, is a group of people who get together for a specific purpose.

On the other hand, a corporation is a legally recognized fake entity that enables one or more people to invest in a project without taking legal responsibility for the entity’s civil conduct.

Corporation Vs. Company

1. Process of Management

Companies and corporations belong to different managerial structures. In comparison between corporation vs. company, Companies make decisions in the best interests of their internal and external stakeholders by publicly making their stocks and shares available.

On the other hand, a small number of internal stakeholders are often present in companies like sole proprietorships and partnerships, which don’t issue shares to the general public.

2. Filing taxes

Filing Taxes

The comparison between corporation vs. company in terms of taxes is that Companies regularly pay taxes on their earnings or permit owners to record and file earnings as individual income.

Instead of paying individual income taxes, the government demands that all firms register and spend taxes as business entities from corporations.

Compared to many other companies, corporations are subject to substantially stricter legal restrictions. Other business structures are subject to fewer regulations, although they frequently do not function as independent legal entities from their owners.

What is the Difference Between a Company and a Corporation?

Highlighting the main difference between corporation and company in the following table:

The members of the company are owners.The members of a corporation are shareholders.
Only a few owners or members.No restrictions on the number of shareholders or owners
Compared to corporate, there are less legal requirements to satisfy and less paperwork to do.There are many legal requirements to be met, as well as a lot of paperwork.
Less complex records and accounts are kept.Very detailed accounts and records are kept.


Both the terms “company” and “corporation” have evolved to mean the same things in the business world.

The size is the primary difference between corporation and company. The company is a small firm or entity, whereas the corporation is a large one.

Frequently Asked Questions

1. How are Corporations taxed?

A corporation is often taxed separately from its owners because it is a separate legal entity. Moreover, owners of businesses have the option to classify them as S-type corporations. This indicates that the owner has chosen to tax the corporation just like a sole proprietorship or partnership would. In this instance, owners file both their taxes and the taxes of the corporation at the same time.

2. How is a Corporation Established?

Every state has a different process for incorporation, but generally speaking, you file your articles of incorporation with the division of your state government that deals with corporations. The registration will include the corporation’s name, address, registered agent, and shareholders. Also, you must create your company’s laws and hold a meeting to distribute shares to all of the directors and owners.

Learn more: What is the Difference Between Company and Business?

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