Corporation
Definition: a legal entity that can conduct business in its own name in the same way that an individual does.
A corporation is a legal entity owned by shareholders. In other words, there are several owners of a corporation. All of the shareholders are held liable for the legal actions as well as the debts that the business accrues. Corporations are generally larger than other business firms. They have high administrative fees and extensive tax requirements. Corporations are more established and have numerous employees throughout the business. Corporations usually have stock available for the public to buy.
A corporation must follow the laws of the state where they reside. The first step to forming a corporation is developing a
business’s name and registering this to the state government. There is certain documentation that must be filled out to register a corporation. Depending on the state the corporation may have to establish directors and shareholders. After the business is registered, the corporation must get a business license and permit.
One downfall of a corporation is the taxing. They must pay federal, state, and local taxes. Corporations have a separate tax-paying entity. They also must pay income tax on their profits. Corporations can even be taxed twice, once when the original profit is made, and then again when the dividend are paid to shareholders on their personal tax returns.
Examples:
1. Walmart - Walmart.com
2. AT&T - att.com
3. McDonalds - mcdonalds.com
Advantages:
1. Owners have limited liability - Shareholders' personal assets are protected and they can only be held accountable for investments
in the company.
2. Corporations continue if the owner dies - Since a corporation has shareholders, after the death of an owner, corporations generally continue.
3.Usually able to raise large sums of money - Corporations have an advantage of raising funds through the sale of stocks.
4. Attraction to Potential Employees - Corporations can offer benefits and partial ownership through stocks. This gives corporations the benefit of attracting high-quality and motivated workers.
5. Tax Plan - Corporations file taxes separately from their owners.
Disadvantages:
1. Double taxation - Corporations are taxed twice: once when the company makes a profit and the second time when dividends are paid to
shareholders.
2. Expenses and time - Corporations are expensive and consume a lot of time.
3. Paperwork - There is increased paperwork due to states, federal, and local agencies.
A corporation must follow the laws of the state where they reside. The first step to forming a corporation is developing a
business’s name and registering this to the state government. There is certain documentation that must be filled out to register a corporation. Depending on the state the corporation may have to establish directors and shareholders. After the business is registered, the corporation must get a business license and permit.
One downfall of a corporation is the taxing. They must pay federal, state, and local taxes. Corporations have a separate tax-paying entity. They also must pay income tax on their profits. Corporations can even be taxed twice, once when the original profit is made, and then again when the dividend are paid to shareholders on their personal tax returns.
Examples:
1. Walmart - Walmart.com
2. AT&T - att.com
3. McDonalds - mcdonalds.com
Advantages:
1. Owners have limited liability - Shareholders' personal assets are protected and they can only be held accountable for investments
in the company.
2. Corporations continue if the owner dies - Since a corporation has shareholders, after the death of an owner, corporations generally continue.
3.Usually able to raise large sums of money - Corporations have an advantage of raising funds through the sale of stocks.
4. Attraction to Potential Employees - Corporations can offer benefits and partial ownership through stocks. This gives corporations the benefit of attracting high-quality and motivated workers.
5. Tax Plan - Corporations file taxes separately from their owners.
Disadvantages:
1. Double taxation - Corporations are taxed twice: once when the company makes a profit and the second time when dividends are paid to
shareholders.
2. Expenses and time - Corporations are expensive and consume a lot of time.
3. Paperwork - There is increased paperwork due to states, federal, and local agencies.
Prompting Question: What is a major corporation do you go to the most?
[email protected] Social Studies Date Created: May 2, 2013 Updated: May 18, 2013