Which type of business is owned by stockholders who share in its profits?

A corporation is a type of business that is owned by stockholders who invest in the company by purchasing shares of stock. These stockholders are entitled to share in the profits of the corporation, typically through dividends, which are payments made to shareholders from the company’s earnings. The ownership is represented by stocks, which can be bought and sold, allowing for greater flexibility in investment compared to other business forms.

In a corporation, the liability of the stockholders is limited to the extent of their investment in the company, which means that personal assets of the shareholders are generally protected in case the corporation incurs debts or legal issues. This characteristic often makes corporations a favorable option for individuals looking to invest in businesses with reduced personal financial risk.

Other business types, such as sole proprietorships and partnerships, involve direct ownership and typically do not provide the same level of profit-sharing through stock ownership. Limited liability companies (LLCs) do offer some advantages in terms of liability protection and tax treatment, but they do not operate under a stockholder system. Instead, profits in an LLC are generally distributed among members based on their ownership, not through public stock offerings.