By: Caroline Mooney
How to start a Corporation
What do Corporations do
Three key types of People in Coroporations
The owners of a corporation are stockholders. The ownership is divided into equal parts called shares. A person who invests in a share can become a stockholder. Each stockholder has basic rights. Many of there abilities are transferring ownership to others, voting for members for the body of the corporation, receiving dividends, buying new shares, and sharing in the net proceeds. Also, if the corporation fails, a stockholder can lose only the money invested.
The board of director is the ruling body of the corporation. Like said before, the stockholders elect the board members. Directs have many responsibilities including developing plans and policies to guide the corporation and appoint officers to carry out the plans. In large corporations, the boards usually consist of 10 to 25 directors. Often, directors are stockholders who hold many shares.
The officers of the corporation re the top and head executives who are hired to manage the business. The board of directors usually appoint them. The officers in a small corporation often consist of a president, a secretary, and a treasurer. In large corporations, may have vice presidents in charge of some area such as finance, marketing, and manufacturing. The top officer of the corporation is called a CEO. It stands for the chief executive officer and they are the head financial officer of the CFO, which stands for the chief financial officer.
The two different types of Corporations
- Close corporation
- Open corporation
A close corporation is a corporation that does not offer its shares of stock for public sale. Some stockholders may run it but some of them may help run the business in the same manner that partners operate the business. In some states, a close corporation does not need to make its financial activities known to the public. In addition, it must prepare reports for tax purposes for all states that it operates in.
A open corporation is a corporation that offers its shares of stock for public sale. One of the ways these corporations announce the sale of common stock to the public is to produce an ad in the newspaper. Te corporation must file a registration statement, called a prospectus. A prospectus is a formal summary of the chief features of the business and its stock offering.