A corporation is unique to other forms of business like sole proprietorships because it is recognized as a separate legal entity from its shareholders.
Thus, it has the benefits of limited liability protection. The owners will never be held personally liable for what the company does. The most they can lose is their investment in the business if the company goes bankrupt. Companies hoping to raise money from investors will have an easier time as a corporation, which can sell ownership shares. Corporate profits are taxed, but at a lower rate than the personal income tax rate individuals pay. Potential employees may find working for a corporation, with the prospect of ownership benefits, to be more appealing than working for a privately-held company.
The corporation can offer a medical reimbursement plan, deducting the cost of providing insurance to employees while allowing employees to use the benefit tax-free.
Cons While corporations can certainly shield owners from liability, the downsides are sizeable and very costly: C Corporations are complex and expensive to set up. Once established, corporations spend significant sums of money to stay on top of changing business regulations and timely filing of paperwork.
They are best for large organizations with many employees. Corporations pay federal, state, and sometimes local taxes on profits, unlike LLCs. The corporation pays taxes on dividends paid to shareholders, who then pay taxes on that income themselves.
These include: The name and physical address of the business. A description of the business and its goods and services. The name and address of the registered agent, or the person authorized to receive official notices. A count of the number of shares issued and to whom. And then create by-laws, which are the rules of the corporation. They include, at a minimum: How often the board of directors meets, and when. Managers usually design and oversee these roles and responsibilities in corporate organisations, multinational corporations and state-owned enterprises, where ownership is separated from control.
Even under limited liability, therefore, shareholders of corporations that take greater risks will be "penalized" with higher interest rates on corporate borrowing. A more intimate term is needed to describe the persons whose acts are attributed to the corporation. Second, the large corporations initiated new mass production techniques that destroyed the market value of the craft skills upon which the union shop strategy depended.
Through these procedures, default subscriptions could become property of the corporation , and then dispensed or auctioned off to other individuals. Between and , the federal government spent millions of dollars and allotted over million acres of land to railroad corporations. Beside that, the corporation would help the rich people to transform some of their houses into ward hospital for the family members.
In contrast, the corporations operating private prisons inflict sanctions whose severity is determined by the state. In several areas, the civic corporations had the right to participate in political decision-making and therefore had to be consulted by the city council. Analysis concentrates on international standards set at multiple international meetings mainly by multinational actors, whether corporations, professional groups or others.
Here advocates of corporate responsibilities would hold that those ties justify special duties on the corporation. Private and especially corporate sponsors might be courted, and once a sponsor is found, the corporation's products would be advertised in a well-publicised exhibition.
On the one hand, government corporations and corporate look-alikes have always existed. See all examples of corporation. These examples are from corpora and from sources on the web. Any opinions in the examples do not represent the opinion of the Cambridge Dictionary editors or of Cambridge University Press or its licensors.
Collocations with corporation. Salaries paid to shareholders who are employees of the corporation are deductible. But dividends paid to shareholders aren't deductible and therefore don't reduce the corporation's tax liability. A corporation must end its tax year on December 31 if it derives its income primarily from personal services such as dental care, legal counseling, business consulting and so on provided by its shareholders.
If the corporation is small, the shareholders should prepare and sign a shareholders buy-sell agreement. This contract provides that if a shareholder dies or wants to sell his or her stock, it must first be offered to the surviving shareholders. It also may provide for a method to determine the fair price that should be paid for those shares. Such agreements are usually funded with life insurance to purchase the stock of deceased shareholders.
If a corporation is large and sells its shares to many individuals, it may have to register with the Securities and Exchange Commission SEC or state regulatory bodies. More common is the corporation with only a few shareholders, which can issue its shares without any such registration under private offering exemptions.
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