What is a corporation?
An organized business, that has been granted a state charter recognizing it as a separate legal entity having its own rights, privileges, and liabilities distinct from those of the individuals within the entity. A corporation can acquire assets, enter into contracts, sue or be sued, and pay taxes in its own name. Corporations issue shares of stock to individuals supplying ownership capital and issue bonds to individuals lending money to the business. The corporation is a desirable organization for a business entity for a variety of reasons including the increased capability such an entity has to raise capital. Most large firms, especially those engaged in manufacturing, are organized as corporations. A Corporation is considered by law to be a unique entity separate from those that own it. As an individual entity, a corporation can be taxed, sued, and can enter into contractual agreements. Corporations are owned by shareholders of the corporation, which elect a board of directors to ove
A corporation is a separate legal entity that exists under the authority granted by state law. A corporation has substantially all of the legal rights of an individual and is responsible for its own debts .It must also file income tax returns and pay taxes on income it derives from its operations. Typically, the owners or shareholders of a corporation are protected from the liabilities of the business. However, when a corporation is small, creditors often require personal guarantees of the principal owners before extending credit. The legal protection afforded the owners of a corporation can far outweigh the additional expense of starting and administering a corporation. The owners and employees also pay taxes separately from the corporation. For more information, visit www.mass.gov/sec/cor.
A corporation is a type of business structure created and regulated by state law. What sets the corporation apart from all other types of businesses is that a corporation is an independent legal entity, separate from the people who own, control and manage it. In other words, corporation and tax laws view the corporation as a legal “person,” meaning that the corporation can enter into contracts, incur debts and pay taxes apart from its owners. There are other important characteristics that result from the corporation’s separate existence: a corporation does not dissolve when its owners (shareholders) change or die, and the owners of a corporation are not personally responsible for the corporation’s debts; this is called limited liability.
A Corporation is a common form of business entity that is recognized by a state government. It is granted with legal rights as an entity, separate from the owners of the Corporation. A Corporation is distinguished by limiting the liability of its owner(s), issuing shares of stock that can be transferred from one individual to another, and its ability to have perpetual existence. Since a Corporation is separate from its owner(s), it can protect the owner(s) from being personally liable when the company is being sued, also known as Limited Liability. In addition to Limited Liability, there are tax benefits available to Corporations that are not available to other business entities.
