Glossary of Business Ownership Structures

Board of directors

A body of persons elected by the stockholders to define and establish corporate policy.

Close (closely held) corporation

A corporation in which outstanding shares of stock and managerial control are held by a limited number of stockholders and is not publicly traded.

Corporation

A business entity created by statute and owned by stockholders.

Domestic corporation

A business organization that operates in the state that granted the charter.

Foreign corporation

A corporation that operates in a state other than where it is chartered.

General partner

Individual actively and openly engaged in the business and held to everyone as a partner.

Limited liability company (LLC)

A business organization that features liability protection and pass-through taxation.

Limited partner

Partner whose liability for the firm's debts is limited to the amount of their investment.

Partnership

The voluntary association of two or more people as co-owners of a business.

Private corporation

A corporation formed to carry out some non-governmental function.

Public corporation

A corporation formed to carry out government functions.

Secret partner

A partner who is active but unknown to the public.

Shareholders (stockholders)

Those having title to one or more shares of stock in a corporation; combined, they represent ownership of the corporation.

Silent partner

An individual who takes no active part in the management of a partnership, but has capital invested in the business.

Sole proprietorship

A business owned by one person, who is personally subject to claims of creditors.

Subchapter S corporation

Business organization in which shareholders are taxed as a partnership (no double taxation) without losing corporation status.