sole proprietorships
partnerships
corporations
Corporations are one of the most important forms of business and can easily raise large amounts of financial capital.
Corporations account for only about one fifth of the businesses in the United States, although they are responsible for a majority of all sales. A corporation is a form of business organization recognized by law as a separate legal entity with all the rights of an individual.
Forming a Corporation
Corporate Structure
Advantages
Disadvantages
Corporations account for only about one fifth of the businesses in the United States, although they are responsible for a majority of all sales. A corporation is a form of business organization recognized by law as a separate legal entity with all the rights of an individual.
Forming a Corporation
- People who want to incorporate, or form a corporation must file for permission from the national government or the state where the business will have its headquarters.
- If approved, a charter - a government document that gives permission to create a corporation - is granted.
- The charter states the company's name, address, purpose, and other features of the business.
- The charter also specifies the number of shares of stock, or ownership certificates in the firm.
- These shares are sold to investors, called stockholders or shareholders.
- The money gained from the sale of stock is used to set up the corporation.
- If the corporation is profitable, it may eventually issue a dividend - a check that transfers a portion of the corporate earnings - to each stock holder.
Corporate Structure
Advantages
Disadvantages