The Definition Of Corporation
One thing that you should know about a corporation is that it is a composition of both material resource and staff. Also, in order conduct business, a corporation must be chartered by the state. A corporation is also owned by shareholders. However, the ones that govern the business are those who are on the board of directors. The elected officers will also be the ones who will be responsible for the day-to-day activities. The corporations are also obliged to follow the corporate tax laws. It’s necessary for them to legally file corporate taxes.
Knowing more about C corporations or regular corporations is also important. That said, you should be aware that such corporations can have an unlimited count of shareholders. Also, you should know that even foreign individuals have the right to be a shareholder. You should also know about the public and private shareholders. The usual occurrence is that the shares are held by founders Some of the shares are also held by investors and members of the board. The shares of the corporation can also be held by venture capitalists.
It’s common to have a C corporation these days. The C corporation is known to be a for-profit business. State authorities are also needed when it comes to registering a C-corporation. Part of the registration means that the C corporation must abide by the corporate laws.
When it comes to corporations, you should know that they protect the shareholders from liabilities incurred by the corporation. That’s where the limited liability takes effect. As for the C corporation, you should know that they have to deal with double taxation. For this matter, the corporation will be taxed for their profits. The taxation also involves shareholders being taxed for received distributions from the corporation. When it comes to profit-sharing payments and dividends, they have to be taxed.
In order to incorporate, you have to register your business’ name. You have to pay the necessary fee after you’ve filed the articles for incorporation. Also, it’s necessary for you to draft the corporate bylaws. Then, you will need to hold a meeting for the board of directors.
The necessity for incorporation
One thing that you should know about incorporating is that it is a good way to protect your personal assets while you do business. That said, such is the reason why many people incorporate. Still, incorporation has more benefits and advantages to offer.
If you want to save tax money, then having your own corporation is important. Also, incorporation allows you to have a better flexibility for your business. You also won’t have to worry about audits. You will also get the tools that you need to improve itemization. Another benefit of having a corporation is the fact that it won’t be too complicated to raise capital.
The limited liability is considered as one of the most advantageous features of having a corporation. That’s because the corporation is a separate entity from the shareholders.