Private and Public Companies

Think of all the different companies and businesses you know.  You probably pass dozens of them every day on your way to school.  Most of these businesses are probably privately held.

Privately held business may be owned by one person (called a sole proprietorship).  This person owns 100% of the company, so can make all the business decisions and keep all the profits.

Another type of privately held business is owned by two or more people (called a partnership).  Ownership of the business is shared (though not always equally) among the partners, and some decisions require a vote.  Profits are split among the partners, based on the percentage of the partnership they own.

You cannot invest in these companies by buying stock unless they decide to become publicly held, where they share ownership with anyone who wishes to buy shares of the stock.

It can get confusing too!  A franchise (such a chain restaurant or a car dealership) may be a privately held company owned locally, but they sell for a publicly held company (eg: McDonald's or Toyota).