What is a Public Company?
When starting a business, one must be aware of what form it will be. Whatever legal entity a business takes will be its guiding force until its end: it will ultimately affect every decision made. Both money and taxes (the two most important factors in business) are the entities that shape a business’s entity. Not all companies are public companies. Let’s take a look at the advantages and disadvantages of a public company.
A public company is not privately owned. A public company has sold all or some of its shares through a public offering (IPO) and has issued securities. The company is public because it’s traded in the stock exchange. The public determined the value of the company based on its performance. Even if a company is public, capital can be raised and additional revenue can be generated. As a result, new shares can be offered to the market.
There are some disadvantages of a public company that could sway owners and founders from going public. Public companies are PUBLIC, thus under more scrutiny than privately owned ones. They must file reports with the Securities and Exchange Commission (SEC). These reports are shared with both shareholders and investors. Shareholders have access to financial documents. Comparatively, private companies can be more confidential.
Both public and private companies have these advantages and disadvantages: not one entity is superior to another. Depending on the company, each form of business can allow owners to be more successful.