Explaining corporate stock is made easier by glancing first at some forms of business that do not have shares of stock.

In the simplest type of business organization, one and the same man is sole owner, proprietor, manager, boss, and worker; he is “the whole works.” In occupation he may be, for example, a farmer, a plumber, or a grocer. Or he could be a professional man, such as a physician or a lawyer. Probably he thinks of himself more as a worker than as an owner. But he is in quite a different position from an em ployee who works for somebody else. Nobody pays him a salary or wages. If his income is not large enough to cover his expenses, including what he takes out for personal and family needs, then he must either cut his expenses or in crease his income by finding more customers or selling more per customer or raising prices, or else he must go out of business. When he wants a new machine to do better or more work, he must find the capital to pay for it. These are the responsibilities of an equity owner of any independent, private business, no matter how small or large the organiza tion is. Certified Financial Planner - Read More.