Dear friend,
What you have asked is not at all a simple question at least, for a beginner.
I love it. Many people consistently do a mistake by not rising layman's questions when they enter into any new field. That itself kills the roots of the learning curve. I mean this in very general sense and I don't mean that to enter in stock trading one must know each and everything about stocks which may be inappropriate.
Let me write this post in small segments, if you let me know whether you this post exactly mean what you needed to know.
In India, there are thress type of Business bodies exist.
1. Proprietorship
2. Partnership
3. Company
Each form of business has different legal arrangements.
Proprietorship is a person who invests for a business and runs it.
In the eyes of law, a proprietor himself or herself is considered as the organization.
Assets, Loans, Profits of the business = Assets, Loans, Profits of the Proprietor
To put it in simple words, the business is simply represented by the person who holds the "ownership" of the business
Partnership firm is a business run by more than one person.
Group of people enter into a legal contract. By executing a legal deed, they enter into the business. The deed describes each partner's investment and return in legal terms.
Company is also run by group of people, but they entirely different from a partnership firm. Management and ownership of a company is clearly distinguished by law. There can not be a "owner" for a company.
Here comes the concept of "Share". Again there are two kind of companies under Companies Act. They are Private Limited companies and Public Limited companies.
If and only if you find this post correctly points at where you need to start to know things, I would be interested to post about how and why a company distributes shares to public? and how and why people exchange the shares among them by trading through exchanges.
