corporation(No stupid questions here. Just an inquisitive idiot)
Nearly every manufacturer of consumer goods that I can find on google is licensed as a corporation.
From what I understand, though, other business licenses are permitted to do the same type of work: according to the State of Washington’s Business Licensing Service website, “LLCs are permitted to engage in any lawful, for-profit business or activity other than banking or insurance.” Further, LLcs are “formed by 1 or more individuals or entities”. I see nothing in their description, in fact, that would make any big, well-known corporation ineligible to run under another license.
So, to use a well-known brand as example, what would be different about the Pepsi organization if it were Pepsi, LLC instead of Pepsi Inc?
I know these companies have good reason to license the way they do, I just can’t figure out what that reason is.
The most important reason that businesses use a corporate legal structure would be that most states do not allow LLCs the multitude of options that corporations have to raise capital. LLCs in most states cannot issue shares to the public, issue bonds and issue preferential stock and have preferred dividend distribution with the same flexibility as corporations.
Essentially when a company is issuing shares to the public. It is letting the public own a share of the company and its profit for immediate money. The money coming in from the sale of shares can be used to buy new equipment, run marketing campaigns etc.
If Pepsi was an LLC, Pepsi can still operate its business but it cannot be listed on the New York Stock Exchange and sell shares to the public at $90 a piece. Without sale of shares to the public, the company may not have been able to raise the capital it needed to grow and become a global company.
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