Business owned by a group of people
How do you become a corporation?
In order to become a corporation, you must obtain a charter (an official document through which a state grants the power to operate as a corporation).
3 step process to become a corporation...
- Make a series of management decisions about how it will be organized.
- Prepare legal forms and send to state offices that handle such matters.
- State will review the incorporation papers and issue a charter, if approved.
What can a corportation do?
Closed V.S. Open Corporations
Closed: One hat does not offer its shares of stock for public sale. In most states, this type of corporation does not need to make its financial activities known to the public.
Open: One that offers it shares of stock for public sale.
People who are the top executives who are hired to manage a business. The board of directors appoints them.
Usually consist of...
- Vice President (depending on how large the business is)
Someone who buys a share or shares of a stock is considered a stockholder, or shareholder. Therefore, several people can own a corporation.
Stockholders have the right to...
transfer ownership to others
vote for members on special matters brought before the stockholders
buy new shares of stock
share the net proceeds
Board of Directors
Preparing the certificate of incorporation
Naming the business:A business is usually required by law to have a name that clearly indicates that a corporation has been formed. (ex. York, Burton, and Chan, Inc.)
Stating the purpose of the business:A certificate of incorporation requires a corporation to describe its purpose clearly.
Paying incorporation costs: A new corporation must pay an organization tax, based on the amount of its capital stock.
Organization Chart for a Corporation
Stockholders → Board of Directors →
President→ Vice President & Secretary & Treasurer