Q:

What are characteristics of corporations?

A:

Quick Answer

A corporation is an independent legal formation owned by a group of shareholders. Due to its distinct legal status, a corporation is awarded several rights and responsibilities, including the ability to borrow and lend funds, hire and fire employees, pay taxes, own assets and enter into contracts.

Know More

Full Answer

As a distinct legal entity, the corporation itself — and not the shareholders who collectively own the corporation — is liable for all debts and claims made against the business. This limited liability structure allows shareholders to claim portions of the corporation's profits, while eliminating personal liability for the entity's debts.

Corporations are established through the process of incorporation, which requires strict adherence on the part of the shareholders to the laws of the state where the corporation files. Due to the complexity, substantial tax requirements and administrative obligations of corporations, incorporation is sought typically by large and established businesses. Corporations are required to pay federal and state income taxes.

Following the incorporation process, shareholders elect a board of directors who are collectively responsible for managing the entity. Corporations can be held privately or can operate by selling ownership shares on the stock market. Some corporations offer stock shares, and therefore ownership status, to employees as a benefit and incentive.

Learn more about Corporations
Sources:

Related Questions

  • Q:

    What is the Sony Corporation?

    A:

    The Sony Corporation is the parent company, or base unit, of the Sony Group, which includes the brands Sony Mobile Communications, Sony Computer Entertainment America LLC, Sony Pictures Entertainment Inc. and Sony Music Entertainment. The headquarters of the Sony Corporation is located in Tokyo, Japan.

    Full Answer >
    Filed Under:
  • Q:

    What is a C corporation?

    A:

    A C corporation is a corporation that is taxed separately from the shareholders of the corporation. The company is taxed at the corporate level, and then the shareholders are taxed on payments from the corporation at the personal level. This results in a double taxation.

    Full Answer >
    Filed Under:
  • Q:

    What is a government corporation?

    A:

    A government corporation is a state-owned entity that is created in order to pursue commercial or industrial activities on behalf of a national government. These can be completely owned or partially owned by a government.

    Full Answer >
    Filed Under:
  • Q:

    What is an S corporation?

    A:

    An S corporation is a formal business structure that company owners can set up under Subchapter S of the Internal Revenue Code. This type of business allows owners to take advantage of some benefits of a limited liability company along with some tax advantages of a corporation.

    Full Answer >
    Filed Under:

Explore