By: Dylan Gephart
Corporations are few in number, but generally large in size. A corporation is a business owned by a group of people and authorized by the state in which they are located to act as though it were a single person, separate from its owners. To get permission to form a corporation, organizers must obtain a charter. A charter is the official document through which a state grants the power to operate as a corporation. A corporation is, in a sense, a artificial person created by the laws of the state. A corporation can make contracts, borrow money, own property, and sue or be sued in its own name. Any act performed for the corporation by an authorized person, such as an employee, is done in the name of the business. Corporate sales of goods and services were more than 20 times greater than sales from proprietorships, and more than six times greater than sales from partnerships in the United States.
The owners of a corporation are stockholders. Ownership is divided into equal parts called shares. A person who buys one share becomes a stockholder, or shareholder. Therefor thousands of people can own a corporation.
The board of directors is the ruling body of the corporation. The stockholders elect board members. Directors have the management oversight responsibilities to develop plans and policies to guide the corporation as well as appoint officers to carry out the plans. Boards usually consist of 10 to 25 directors. A few board members are top executives from within the corporation.
A closed corporation is one that does not offer its stocks to be sold publicly. A open corporation is one that does allow its stocks to be sold publicly. Sources can get capital from many different sources. One source is from its stockholders. Stockholders, managers, and directors are not responsible for debt within a corporation. It is easy to transfer ownership of a corporation. Corporations are subject to more taxes than are imposed on the proprietorship and the partnership. A corporation can only engage in activities that are stated in its charter.