What is the difference between a private company and a public company?

What is the difference between a private company&a public company?

• Answer:

  The primary difference between a private and public company is the requirement to disclose financial information. Private companies are not required to report their finances to the Securities and Exchange Commission. Public companies are required to file financial performance reports.Advantages of Private CompaniesPrivately owned companies can keep their financial information hidden from the public and do not have to contend with the laborious paperwork required of public companies.Disadvantages of Private CompaniesAlthough private companies do not have to worry about extensive financial reporting, their shares are not easily converted to cash.Advantages of Public CompaniesCompanies that want to rapidly expand and gain access to capital may go through an initial public offering, the first sale of stock to the public. By going through an initial public offering, businesses can gain enormous exposure.Disadvantages of Public CompaniesPublic companies must pay the enormous costs associated with filing public documents. According to Investopedia, these costs rose when the Sarbanes-Oxley Act took effect in 2002.Types of Private and Public CompaniesSmall businesses such as retail stores and restaurant establishments are often privately held companies. Meanwhile, public companies are often banks, insurance companies and national chains.Source:http://www.investopedia.com/terms/p/publiccompany.asphttp://www.investopedia.com/ask/answers/06/ipoadvantagedisadvantage.asp