A corporation is created when it is incorporated by a group of shareholders who share ownership of the corporation , represented by their holding of stock shares, and pursue a common goal. The vast majority of corporations have a goal of returning a profit for their shareholders.
What is corporation formation?
Formation. In order to form a corporation, a Certificate of Incorporation or Articles of Incorporation must be filed with the Secretary of State of the state in which the company will be incorporated . The certificate or articles are usually signed by a sole incorporator, whose only function is to create the company.
How are corporations formed?
The creation of a corporation involves a legal process called incorporation where legal documents containing the primary purpose of the business, name and location, and the number of shares and types of stock. The shares are more senior than common stock but are more junior relative to debt, such as bonds.
Why is a corporation formed?
Corporations offer the strongest protection from business liability for the business owners, or shareholders. ... Corporations will pay their own taxes, can own property, enter contracts, sue and be sued independently of those who own them and are responsible for their own debts and actions.
How is a corporation formed and organized?
A corporation is typically created when one or more individuals file “articles of incorporation” with a Secretary of State in a particular jurisdiction . ... After reviewing the articles of incorporation, the Secretary of State will issue a charter (or certificate of incorporation) authorizing the corporate entity.
What are 4 types of corporations?
The different types of corporations and business structures. When it comes to types of corporations, there are typically four that are brought up: S corps, C corps, non-profit corporations, and LLCs .
What are 3 types of corporations?
- C corporation (C corp)
- S corporation (S corp)
- Limited liability company (LLC)
What is the first step in creating a corporation?
- Select a corporate name. ...
- Draft and file your articles of incorporation. ...
- Create corporate bylaws. ...
- Draft a shareholders' agreement. ...
- Maintain corporate minutes. ...
- Issue shares of stock. ...
- Obtain an Employer Identification Number. ...
- Select a tax election.
What is corporation in your own words?
Definition: A corporation is a legal form of business that is separate from its owners. In other words, it's a business that is a separate legal entity from its shareholders . ... They purchased the stock and legally own the assets of the business.
What are examples of corporations?
Corporation example includes General Motors Corporation or GMC an icon of American craftsmanship, Apple Corporation as one of the famous tech companies, Amazon Corporation founded by Jeff Bezos is the world's leading eCommerce and innovation company, Domino's Pizza is a global food chain company delivering quality food ...
What are 3 disadvantages of a corporation?
- Double taxation of corporation profits. The corporation pays federal and state taxes on its profits. ...
- Forming a corporation costs more. Attorneys charge more to form a corporation.
- States have higher fees. ...
- More state and federal regulations and oversight.
What is the difference between a company and a corporation?
They are in effect the same legal entity as their business . However, companies are distinct from their owners. A company is a separate legal entity. ... Corporations are basically a type of company, as they also have their own separate legal status.
How do you tell if a company is a corporation?
The Secretary of State where the company is incorporated You can find out whether the company is a corporation in good standing and has filed annual reports with the state through the secretary of state where the company is incorporated.
Are corporations easy to form?
Forming a corporation is more complicated and more expensive than forming a sole proprietorship or a simple partnership because you must file paperwork with the Secretary of State in the formation state. ... A corporation does not have to be organized in the state in which it is going to do business.
What is the purpose of corporation?
The purpose of a corporation is to conduct a lawful, ethical, profitable and sustainable business in order to create value over the long-term, which requires consideration of the stakeholders that are critical to its success (shareholders, employees, customers, suppliers, creditors and communities), as determined by ...
What are the benefits of corporation?
Advantages of a corporation include personal liability protection, business security and continuity, and easier access to capital . Disadvantages of a corporation include it being time-consuming and subject to double taxation, as well as having rigid formalities and protocols to follow.
