It is a type of commercial company that is owned only by private investors , shareholders, owners, non-governmental, and in turn is in contrast to state institutions such as government agencies or public companies.
Private companies are part of the make up the private sector of the economy . An economic system that is constituted by a private sector in which private companies are the backbone of the economy and the trade surplus is managed by the owners, this is known as capitalism.
The taking of assets in the private sector is what is known as privatization. The purpose of a private company is contrasted with other institutions, the main difference is that this type of company exists solely to generate profits for shareholders or owners.
To work in private companies you have to be a worker or partner. Its owners can be individuals and also legal entities . Private companies are not chartered by the government, but are chartered by their fellow retailers.
They tend to be of great importance for the development of a country , this because these organizations generate income to the state through taxes, which are calculated according to the income that the company obtains at the time of marketing the product in the market. .
Throughout history, private companies have become globalized in various markets of the economy, such as the service area (transportation, gas and electricity), this in certain cases tends to be counterproductive, due to the fact that the costs of The various services can be raised since, unlike public companies, you are only looking for monetary benefit.
The high cost of undertaking an initial public offering is one of the reasons why a large number of small companies remain private. Certain family companies become public companies , and maintain control and ownership of the families through a dual class share order, which means that family shares can present more voting rights.
Examples of private companies
- Motorola (cell phone manufacturer)
- The real
- Mac donald
- Mac donald
- Private companies generally have fewer requirements for transparency or comprehensive reporting obligations, through annual reports, etc. That the companies that are destined to be listed on the stock exchanges.
- By not having the obligation to disclose details about their financial prospects and operations, companies do not reveal valuable information that can help their competitors.
- With limited reporting requirements and shareholder expectations, private companies gain greater operational flexibility by having the ability to focus on long-term growth rather than quarterly profit.
- There are different types of companies, among these are the sole proprietorship , these are especially owned by a single shareholder, therefore, this will be the only one responsible for dealing with the debts that the company owns.
- The associations are different in the sense that it is formed from the partnership between two or more people and because of this, all the partners are responsible for the debts that the organization acquires.
- The corporation is a legal person , created by natural persons to carry out a certain activity, these in turn have different responsibilities and privileges from their shareholders.