Joint – Stock Company
An Entrepreneur or business owner will sell stock to investors, and in return, promise the investors a percentage of the company’s profits, based on how much stock they buy. We see this in larger businesses in the US, most notably during the market crash we experienced a couple years ago. Independent investors as well as other companies bought and shared stock with many of the big banking corporations, since the bands values began to drop, shareholders were trying to get rid of their stock in the company, just to be able to get their money back. This caused frenzy in the stock market, and we saw banks crash overnight. Banks no longer had the money to manage their day to day operations, and they found themselves actually in debt to many of their customers. So many customers lost their 401k’s and other investments, because the funds were simply no longer there, thanks to the withdrawal of banking investors.
Another example is the new TV show, ‘Shark Tank’, where wealthy investors will give small business owners a chance to pitch a deal to them. The owner will ask for a certain amount of investment in order to grow their company, in return a share of the profits with the investor from their business. This is an interesting show to watch, because it kind of gives a more personal feel to the stock market, and insight as to how investors think and view businesses to decide on whether or not they would be a profitable investment.
Limited liability Company
In a limited liability situation, an Entrepreneur or business owner is not personally liable for the company. This is the way the business owners can protect their personal assets, in case their business goes bankrupt. The only money that is at risk is what has been invested in the company by the stockholders. If I was a going to start a business, I would want to try to
