Corporation
Corporation
- A corporation is a form of business organization that exists
separate and apart from its owners who are called shareholders. Unlike the
owner(s) and management of a sole proprietorship or partnership, the owners and
management of a corporation can shield themselves from personal liability for
the debts and obligations of the
business.
State laws govern the formation, operation and dissolution of a corporation and the rights and duties of its directors, officers and shareholders. Both federal and state laws govern the corporation's issuance of securities such as stocks and bonds.
To form a corporation, you generally just file your Articles of Incorporation with the proper state agency, pay your filing fee and pay your minimum franchise taxes in advance. Next, you hold an Organizational Meeting (a meeting of incorporators or, if they are identified in the Articles of Incorporation, the initial members of the Board of Directors). During the organizational meeting, the incorporators elect your first Board of Directors, adopt the initial corporate by-laws and authorize the Board of Directors to issue stock.
Next, you can hold your first meeting of your Board of Directors which among other things will ratify the acts of the incorporators, elect the officers of the corporation, issue stock to the founders in exchange for specified amount of cash or property (capital contribution), decide if your corporation will make a subchapter "S" election, and authorize the opening of a corporate bank account. The laws of most states require your corporation to have at least one director and two officers, usually the President and Secretary.
Compared to non-corporate entities, corporations enjoy greater tax deductions for health insurance and medical expenses and lower payments for social security tax and Medicare tax. And, due to the familiarity of the investing public, including large institutional investors, with public corporations and stock markets, in the long run corporations are the best vehicles for raising large sums of capital for a business.
For the more information on the two types of corporations, and the different tax implications for each one, see "C" Corporation and "S" Corporation.
Disclaimer: The foregoing is intended to provide general information and may not be suitable in specific instances. The glossary information is not intended to be exhaustive, but rather to illustrate typical considerations. The material is provided with the understanding that it is not legal, accounting, tax or any other professional advice.
Copyright © 2003-2010 LawVantage.com, LLC. All rights reserved.
Important LawVantage.com, LLC and its website, CorporateBoardMinutes.com, do not render any legal, accounting or other consulting advice.
For legal advice, you should always consult with a qualified attorney-at-law.
Website development by
Vine Design.
State laws govern the formation, operation and dissolution of a corporation and the rights and duties of its directors, officers and shareholders. Both federal and state laws govern the corporation's issuance of securities such as stocks and bonds.
To form a corporation, you generally just file your Articles of Incorporation with the proper state agency, pay your filing fee and pay your minimum franchise taxes in advance. Next, you hold an Organizational Meeting (a meeting of incorporators or, if they are identified in the Articles of Incorporation, the initial members of the Board of Directors). During the organizational meeting, the incorporators elect your first Board of Directors, adopt the initial corporate by-laws and authorize the Board of Directors to issue stock.
Next, you can hold your first meeting of your Board of Directors which among other things will ratify the acts of the incorporators, elect the officers of the corporation, issue stock to the founders in exchange for specified amount of cash or property (capital contribution), decide if your corporation will make a subchapter "S" election, and authorize the opening of a corporate bank account. The laws of most states require your corporation to have at least one director and two officers, usually the President and Secretary.
Compared to non-corporate entities, corporations enjoy greater tax deductions for health insurance and medical expenses and lower payments for social security tax and Medicare tax. And, due to the familiarity of the investing public, including large institutional investors, with public corporations and stock markets, in the long run corporations are the best vehicles for raising large sums of capital for a business.
For the more information on the two types of corporations, and the different tax implications for each one, see "C" Corporation and "S" Corporation.
Disclaimer: The foregoing is intended to provide general information and may not be suitable in specific instances. The glossary information is not intended to be exhaustive, but rather to illustrate typical considerations. The material is provided with the understanding that it is not legal, accounting, tax or any other professional advice.
Copyright © 2003-2010 LawVantage.com, LLC. All rights reserved.
Important LawVantage.com, LLC and its website, CorporateBoardMinutes.com, do not render any legal, accounting or other consulting advice.
For legal advice, you should always consult with a qualified attorney-at-law.
Website development by
Vine Design.