The towers on the business landscape
A corporation is a business owned by a group of people and authorized by the state in the location it is to act as though it were a single person. For someone to get permission to form a corporation, organizers must obtain a charter. A charter is an official certificate which grant power to operate a corporation. A corporation can make contracts, borrow money, own property, and sue or be sued using the corporations name - not a single person.
Corporations play a vital role in business, and they play a big role in the country an others. Corporations employ millions of people, contain many layers of management, and provide customers with goods and services they use daily. Sales of goods and services were more than 20 times greater than sales of proprietorships and six times greater than sales from partnerships.
Close and Open Corporations
A close corporation is a corporation that does not offer its shares in stock for public sale. It also doe snot need to make its financial activities known to the public and its stock is not offered for general sale. However, closed corporations must prepare reports for tax purposes. An open corporation is one that offers its shares of stock to the public. The corporation must file a Securities and Exchange Commission containing details about the corporation and its stock.
Stockholders are owners of a corporation. Ownership is divided into equal parts known as shares. Anyone who buys a share becomes a shareholder. Stockholders can: transfer ownership to others, vote for members of the ruling body, receive dividends, buy new shares, and share net proceeds. Directors are the ruling body of the board. Directors have the management oversight responsibilities to develop plans and policies to guide the corporation. The board often contains 10 to 25 members. Officers of a corporation are the top executives who are hired to manage the business. The board appoints them to office. The top officer is called a CEO and the head financial officer is the CFO.
Naming the business is required by law to indicate clearly that a corporation has been formed. Words or abbreviations such as Corporations, Corp.,Incorporated, or Inc must be used at the end of the name. A certificate of incorporation requires the corporation to describe its purpose clearly. For major changes in purpose, a new form must be submitted and approved. Most corporations must pay an organization tax, based on the amount of capital stock.
Organizing a New Corporation
Getting organized is one of the first steps when getting the new corporation underway. A prepared balance sheet or statement of financial position is one way to get organized. Handling voting rights is another way to stay organized.
A corporation can obtain money from many sources, one source is from shares sold to shareholders. A corporation is a more permanent type of business rather than a proprietor or partnership. The death or withdrawal of a an owner does not affect its life. It is easy to transfer ownership in a corporation through transferring shares into someone else's name. The corporation is also subject to more taxes than any other form of business. some taxes are unique to the business and have fees that apply as well. To open a corporation, it must be approved through a charter sent to the correct state official, usually secretary of the state.