CandleFocus Glossary Editor
A corporation is a legal entity separate from its owners, which is typically used when forming a business in the United States. It is a type of business that is owned by shareholders and managed by a board of directors. A corporation exists when it is established through the approval of a state and it is treated as a separate legal entity from its owners.
The major advantage of organizing a business as a corporation is limited liability. This means that the shareholders of a corporation are not personally responsible for the debts and obligations of the corporation. The directors and officers of the corporation may be held liable for their own misdeeds, but the shareholders are typically only financially responsible for the money they invested in the corporation.
A corporation may be created by a single individual or by a group of people with a shared goal. Corporations may be established for the purpose of making a profit, but some corporations exist to provide a service or to further a certain cause. For example, a non-profit corporation may be created to further the mission of a certain charity or educational organization.
Corporations have a variety of duties and responsibilities. These include filing annual financial statements, paying taxes and keeping records of meetings, transactions and elections. A corporation must also follow the laws of the state where it is incorporated, as well as federal regulations.
The corporate form of business also provides stability and continuity. The death, retirement or withdrawal of shareholders or directors does not necessarily disrupt the operations of the corporation since ownership is vested in the corporation itself. Furthermore, perpetual existence is a feature of a corporation; the life of a corporation is not necessarily jeopardized by the death of its shareholders or directors.
Overall, the corporation is a distinctly beneficial form of business organization. The corporate form of ownership provides its owners with limited liability, continuity and stability. Corporations may be formed for the purpose of making a profit, but also for charitable and other purposes. Corporations have a number of responsibilities and duties to follow, but these may be offset by the benefits of the corporate form of organization.
The major advantage of organizing a business as a corporation is limited liability. This means that the shareholders of a corporation are not personally responsible for the debts and obligations of the corporation. The directors and officers of the corporation may be held liable for their own misdeeds, but the shareholders are typically only financially responsible for the money they invested in the corporation.
A corporation may be created by a single individual or by a group of people with a shared goal. Corporations may be established for the purpose of making a profit, but some corporations exist to provide a service or to further a certain cause. For example, a non-profit corporation may be created to further the mission of a certain charity or educational organization.
Corporations have a variety of duties and responsibilities. These include filing annual financial statements, paying taxes and keeping records of meetings, transactions and elections. A corporation must also follow the laws of the state where it is incorporated, as well as federal regulations.
The corporate form of business also provides stability and continuity. The death, retirement or withdrawal of shareholders or directors does not necessarily disrupt the operations of the corporation since ownership is vested in the corporation itself. Furthermore, perpetual existence is a feature of a corporation; the life of a corporation is not necessarily jeopardized by the death of its shareholders or directors.
Overall, the corporation is a distinctly beneficial form of business organization. The corporate form of ownership provides its owners with limited liability, continuity and stability. Corporations may be formed for the purpose of making a profit, but also for charitable and other purposes. Corporations have a number of responsibilities and duties to follow, but these may be offset by the benefits of the corporate form of organization.