1. Publicly Traded Companies vs. Privately
Owned Companies
The main differentiator between publicly traded companies and privately owned companies is
... [Show More] that publicly
traded companies have their stock listed on an open market, while privately owned companies do not.
Publicly traded companies are under more scrutiny, because they have to provide reporting information at
certain intervals. There are also more regulatory requirements for publicly traded companies.
Privately owned companies, on the other hand, are more nimble. They don't have the same regulatory
oversight as publicly traded companies.
EXAMPLE For example, if publicly traded companies want to make a big decision, they must have
shareholder approval, which can be a difficult and long process. Privately owned companies, because they
are more nimble, can focus more on growth and expanding the business, without being mired in the
shareholder approval process.
Publicly traded companies can sell more shares, so it is easier for them to gain access to new capital as they
need it. This is more difficult for privately owned companies, because they have to go out and try to raise the
capital from different investors.
Publicly Traded Companies Privately Owned Companies
© 2019 SOPHIA Learning, LLC. SOPHIA is a registered trademark of SOPHIA Learning, LLC. Page 1
Stock listed on an open market
More scrutiny; need shareholder approvals
Sell more shares
Stock NOT listed on an open market
More nimble; can focus on growth
Difficult to raise capital
2. Legal Entities
There are several different legal entities involved in accounting.
A sole proprietorship is a type of company that is owned by a single individual, where the individual and the
business are legally treated as the same.
In contrast, a limited liability company company, or an LLC LLC, is a type of company where owners are not held personally
responsible for the organization's liabilities.
A limited liability partnership partnership, or an LLP LLP, is a type of company where only one of the partners is liable for the [Show Less]